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Do Federal Layoffs Have Ripple Effects on Local Economies?

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Abstract

We investigate the extent to which low-skill job openings have accompanied reductions in the federal workforce. As of May 31, 2025, we find small effects. Our findings suggest that the local demand channel identified in the economic literature — whereby high-skill jobs sustain low-skill ones via high-skill workers' demand for nontradable goods and services — is rather muted so far for federal jobs.

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  • Katrina Borovickova & Claudia Macaluso, 2025. "Do Federal Layoffs Have Ripple Effects on Local Economies?," Richmond Fed Economic Brief, Federal Reserve Bank of Richmond, vol. 25(36), September.
    • Handle: RePEc:fip:fedreb:101770
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