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Excess Persistence in Employment of Disadvantaged Workers

Bruce Fallick () and Pawel Krolikowski ()

No 201801R, Working Papers from Federal Reserve Bank of Cleveland

Abstract: We examine persistence in employment-to-population ratios in excess of that implied by persistence in aggregate labor market conditions, among less-educated individuals using state-level data for the United States. Dynamic panel regressions and local projections indicate a moderate degree of excess persistence, which dissipates within three years. We find no significant asymmetry between the excess persistence of high vs. low employment rates. The cumulative effect of excess persistence in the business cycle surrounding the 2001 recession was mildly positive, while the effect in the cycle surrounding the 2008-09 recession was decidedly negative. Simulations suggest that the lasting employment benefits of temporarily running a ?high-pressure? economy are small.

Keywords: persistence; unemployment; labor market tightness; employment (search for similar items in EconPapers)
JEL-codes: E24 J21 J24 (search for similar items in EconPapers)
Pages: 50 pages
Date: 2019-08-30
New Economics Papers: this item is included in nep-mac
Note: This is a revision of working paper 18-01 titled “Hysteresis in Employment among Disadvantaged Workers.”
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DOI: 10.26509/frbc-wp-201801r

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