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The Evolution of Local Labor Markets After Recessions

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Abstract

This paper studies how U.S. local labor markets respond to employment losses after recessions. Following each recession between 1973 and 2009, we find that areas that lose more jobs during the recession experience persistent relative declines in employment and population. Most importantly and contrary to prior work, these local labor markets also experience persistent decreases in the employment-population ratio and per capita earnings. Our results imply that limited population responses result in longer-lasting consequences for local labor markets than previously thought, and that recessions are followed by persistent reallocation of employment across space.

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  • Brad Hershbein & Bryan Stuart, 2022. "The Evolution of Local Labor Markets After Recessions," Working Papers 22-16, Federal Reserve Bank of Philadelphia.
    • Handle: RePEc:fip:fedpwp:94167
    DOI: 10.21799/frbp.wp.2022.16
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    Cited by:

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    2. Hershbein, Brad & Stuart, Bryan A., 2023. "Place-based consequences of person-based transfers: Evidence from recessions," Journal of Public Economics, Elsevier, vol. 224(C).
    3. Katheryn Russ & Jay C. Shambaugh & Sanjay R. Singh, 2023. "Currency Areas, Labor Markets, and Regional Cyclical Sensitivity," NBER Working Papers 31519, National Bureau of Economic Research, Inc.
    4. Kevin Rinz & John Voorheis, 2023. "Re-examining Regional Income Convergence: A Distributional Approach," Opportunity and Inclusive Growth Institute Working Papers 065, Federal Reserve Bank of Minneapolis.

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    More about this item

    Keywords

    local labor markets; recessions; employment rates; migration;
    All these keywords.

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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