Cyclical Unemployment: Sectoral Shifts or Aggregate Disturbances?
AbstractRecent work by David Lilien has argued that the positive correlation between the dispersion of employment growth rates across sectors (a) and the unemployment rate implies that sectoral shifts in labor demand are responsible for a substantial fraction of cyclical variation in unemployment. This paper demonstrates that, under empirically satisfied conditions, traditional single-factor business-cycle models will produce a positive correlation between (sigma) and the unemployment rate. Information on the job vacancy rate permits one to distinguish between a pure sectoral shift and a pure aggregate demand interpretation of this positive correlation. The finding that a and the volume of help wanted advertising (a job vacancy proxy) are negatively related supports an aggregate demand interpretation.
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Bibliographic InfoPaper provided by Harvard University Department of Economics in its series Scholarly Articles with number 3442781.
Date of creation: 1986
Date of revision:
Publication status: Published in Journal of Political Economy -Chicago-
Other versions of this item:
- Abraham, Katharine G & Katz, Lawrence F, 1986. "Cyclical Unemployment: Sectoral Shifts or Aggregate Disturbances?," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 507-22, June.
- Katharine G. Abraham & Lawrence F. Katz, 1987. "Cyclical Unemployment: Sectoral Shifts or Aggregate Disturbances?," NBER Working Papers 1410, National Bureau of Economic Research, Inc.
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Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- Using Beveridge curve dynamics to identify cyclical and structural shocks
by David Andolfatto in MacroMania on 2012-01-24 16:45:00
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