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The Evolution of Local Labor Markets after Recessions

Author

Listed:
  • Brad Hershbein
  • Bryan A. Stuart

Abstract

This paper studies how US local labor markets respond to employment losses that occur during recessions. Following recessions from 1973 through 2009, we find areas that lose more jobs during the recession experience persistent relative declines in employment and population. Most importantly, these local labor markets also experience persistent decreases in the employment-population ratio, earnings per capita, and earnings per worker. 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.

Suggested Citation

  • Brad Hershbein & Bryan A. Stuart, 2024. "The Evolution of Local Labor Markets after Recessions," American Economic Journal: Applied Economics, American Economic Association, vol. 16(3), pages 399-435, July.
    • Handle: RePEc:aea:aejapp:v:16:y:2024:i:3:p:399-435
    DOI: 10.1257/app.20220132
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    Citations

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    Cited by:

    1. David Autor & David Dorn & Gordon Hanson & Maggie R. Jones & Bradley Setzler, 2024. "Places versus People: The Ins and Outs of Labor Market Adjustment to Globalization," Working Papers 24-78, Center for Economic Studies, U.S. Census Bureau.
    2. 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.
    3. Tucker Smith, 2024. "Do Human Capital Adjustments Protect Youths from Structural Change?," Working Papers 2411, Federal Reserve Bank of Dallas.
    4. Katheryn N. Russ & Jay C. Shambaugh & Sanjay R. Singh, 2024. "Currency Areas, Labor Markets, and Regional Cyclical Sensitivity," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 72(1), pages 152-195, March.
    5. Damiano Di Francesco & Omar Pietro Carnevale, 2025. "Are Hysteresis Effects Nonlinear?," LEM Papers Series 2025/32, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    6. Liu, Yan & Wang, He & Yu, Shu, 2025. "Labor Demand in the Age of Generative AI : Early Evidence from the U.S. Job Posting Data," Policy Research Working Paper Series 11263, The World Bank.
    7. Sarra Ben Yahmed & Francesco Berlingieri & Eduard Brüll, 2025. "Local Labour Market Resilience: The Role of Digitalisation and Working From Home," Journal of Regional Science, Wiley Blackwell, vol. 65(5), pages 1506-1532, November.
    8. Hershbein, Brad & Stuart, Bryan A., 2023. "Place-based consequences of person-based transfers: Evidence from recessions," Journal of Public Economics, Elsevier, vol. 224(C).
    9. Pinto, Sérgio & Steinbaum, Marshall, 2023. "The long-run impact of the Great Recession on student debt," Labour Economics, Elsevier, vol. 85(C).

    More about this item

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • 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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