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A Note on the Cyclical Behavior of Sectoral Employment in the U.S

Hiranya Nath

No 1602, Working Papers from Sam Houston State University, Department of Economics and International Business

Abstract: Using data for 14 major sectors of the U.S. private economy and the government from 1958 to 2014, this note examines the cyclical behavior of sectoral employment. In particular, it investigates if relative volatility and comovement of the cyclical component of sectoral employment with real GDP have changed over time. The cyclical components are extracted using the Hodrick-Prescott (H-P) filter and changes in cyclical properties are detected using rolling standard deviations and rolling correlations. The analysis suggests that these properties have changed substantially for a number of service sectors since the early 1980s. In particular, wholesale and retail trade, transportation and utility, information, financial activities, and professional and business services have experienced significant increases in relative volatility. Furthermore, while the positive correlation between the cyclical components of employment and real GDP has become stronger for wholesale trade, transportation and utility, financial activities, and professional and business services, it has become weaker for information services, leisure and hospitality, and other services. Finally, education and health sector employment has switched from being procyclical to countercyclical. Recognizing these changes is important and useful for future research on business cycle behavior of the labor market in the U.S. and for policy formulation.

Keywords: Cyclical behavior; sectoral employment; rolling standard deviation; rolling correlation; relative volatility; comovement (search for similar items in EconPapers)
JEL-codes: E24 E32 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2016-01
New Economics Papers: this item is included in nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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