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Micro Vs Macro Explanations of Post-War US Unemployment Movements

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Author Info
Chris Heaton () (Department of Economics, Macquarie University)
Paul Oslington (University of New South Wales)

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Abstract

We consider the contribution of sectoral shocks to post-war US unemployment movements in a dynamic factor framework. Whereas previously published estimates of the contribution of sectoral shocks to unemployment relate to a particular theory of unemployment, our approach is sufficiently general to encompass almost any theory. We estimate our model in the frequency domain and use data on unemployment rather than employment or output. Sectoral shocks are found to account for around half the movements in US unemployment. These shocks tend to be of higher frequency than the common shocks and concentrated in the service and manufacturing sectors. Shock frequencies, sectoral patterns and flows provide some clues to the identity of some of the shocks driving unemployment. In some periods, such as the rise in unemployment in the 1970s, common shocks were dominant, but sectoral shocks have been more important in recent years.

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File URL: http://www.econ.mq.edu.au/research/2006/HeatonMicroVsMacro.pdf
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File Function: First Version, 2006
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Publisher Info
Paper provided by Macquarie University, Department of Economics in its series Research Papers with number 0604.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length: 16 pages.
Date of creation: Sep 2006
Date of revision:
Handle: RePEc:mac:wpaper:0604

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Postal: Sydney NSW 2109
Web page: http://www.econ.mq.edu.au/
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Related research
Keywords: Structural Unemployment; Sectoral vs. Aggregate Shocks; Dynamic Factor Analysis;

Find related papers by JEL classification:
J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions

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