Stock-market-based measures of sectoral shocks and the unemployment rate

Puneet Chehal, Prakash Loungani and Bharat Trehan ()

FRBSF Economic Letter, 2010, issue aug2

Abstract: Downturns in the construction and finance sectors played a significant role in the recent recession. A stock-market-based measure that captures sectoral shocks shows that these disturbances are important for explaining long-duration unemployment. This is consistent with the intuition that sectoral shocks cause workers to engage in time-consuming moves across industries in their searches for work. It also suggests that it will take a while before the more than 1.8 million unemployed construction workers and close to a half million unemployed finance and insurance workers find jobs.

Keywords: Unemployment; Employment; Construction industry; Financial services industry (search for similar items in EconPapers)
Date: 2010
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