Secular Labor Reallocation and Business Cycles

Gabriel Chodorow-Reich and Johannes Wieland

Journal of Political Economy, 2020, vol. 128, issue 6, 2245 - 2287

Abstract: We revisit an old question: does industry labor reallocation affect the business cycle? Our empirical methodology exploits variation in a local labor market’s exposure to industry reallocation on the basis of the area’s initial industry composition and national industry employment trends for identification. Applied to confidential employment data over 1980–2014, we find sharp evidence of reallocation contributing to higher local area unemployment if it occurs during a national recession but little difference in outcomes during an expansion. A multiarea, multisector search-and-matching model with imperfect mobility across industries and downward nominal wage rigidity can reproduce these cross-sectional patterns.

Date: 2020
References: Add references at CitEc
Citations: View citations in EconPapers (43)

Downloads: (external link)
http://dx.doi.org/10.1086/705717 (application/pdf)
http://dx.doi.org/10.1086/705717 (text/html)
Access to the online full text or PDF requires a subscription.

Related works:
Working Paper: Secular Labor Reallocation and Business Cycles (2017)
Working Paper: Secular Labor Reallocation and Business Cycles (2016)
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: https://EconPapers.repec.org/RePEc:ucp:jpolec:doi:10.1086/705717

Access Statistics for this article

More articles in Journal of Political Economy from University of Chicago Press
Bibliographic data for series maintained by Journals Division ().