Economics at your fingertips  

Economic diversity, unemployment and the Great Recession

Philip Watson () and Steven Deller ()

The Quarterly Review of Economics and Finance, 2017, vol. 64, issue C, 1-11

Abstract: We revisit the relationship between economic diversity and unemployment in light of the economic shock of the Great Recession. Using U.S. county data we test the overall effect of increased industrial diversity on county level unemployment. Allowing for structured spatial spillovers across counties we find evidence supporting the notion that economic diversity within a given county is associated with lower levels of unemployment across all years of this analysis (2007–2014), while the diversity of neighboring counties was only associated with decreased unemployment at the height of the Great Recession. This spatial spillover effect was responsible for turning the overall marginal effect of diversity on unemployment significant for the period representing the height of the Great Recession and the early recovery period (2009–2011). These results suggest that it is the economic diversity of one’s neighbors that provides an unemployment buffer in times of economic downturns. This spatial spillover effect represents a novel finding and it is hypothesized that diversity of one’s neighbors plays an important role in assisting in the search for employment in response to an economic shock.

Keywords: Diversity; Unemployment; Stability; Spatial econometrics; Model uncertainty (search for similar items in EconPapers)
JEL-codes: J62 R11 C11 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6) Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this article

The Quarterly Review of Economics and Finance is currently edited by R. J. Arnould and J. E. Finnerty

More articles in The Quarterly Review of Economics and Finance from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().

Page updated 2019-10-02
Handle: RePEc:eee:quaeco:v:64:y:2017:i:c:p:1-11