Temporary Layoffs, Loss-of-Recall, and Cyclical Unemployment Dynamics

Mark Gertler, Christopher Huckfeldt and Antonella Trigari

American Economic Review, 2026, vol. 116, issue 3, 862-96

Abstract: We revisit the role of temporary layoffs in the business cycle. While some have emphasized a stabilizing effect due to recall hiring, we quantify from the data an important countercyclical destabilizing effect due to "loss-of-recall," whereby workers in temporary-layoff unemployment lose their job permanently. We develop a quantitative model allowing for endogenous flows of workers across employment and both temporary-layoff and jobless unemployment. The model captures both pre- and post-pandemic unemployment dynamics, including the contractionary role of loss-of-recall. We use our structural model to show that the Paycheck Protection Program generated sizable employment gains, in part by significantly reducing loss-of-recall.

JEL-codes: E24 E32 I12 J41 J63 J64 (search for similar items in EconPapers)
Date: 2026
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Related works:
Working Paper: Temporary Layoffs, Loss-of-Recall, and Cyclical Unemployment Dynamics (2022)
Working Paper: Temporary Layoffs, Loss-of-Recall, and Cyclical Unemployment Dynamics (2022)
Working Paper: Temporary Layoffs, Loss-of-Recall and Cyclical Unemployment Dynamics (2022)
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DOI: 10.1257/aer.20220749

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