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Inter- and Intrasectoral Shocks: Effects on the Unemployment Rate

Listed author(s):
  • Shin, Kwanho

Intersectoral shocks require resource reallocation across sectors while intrasectoral shocks require resource reallocation within sectors. A crucial difference between these shocks is that the former require much higher adjustment costs than the latter. Using accounting data to calculate returns on capital in manufacturing industries, the author generates proxies for these shocks. The author finds that the magnitude of intrasectoral shocks is much greater than that of intersectoral shocks but intersectoral shocks explain the aggregate unemployment rate better than intrasectoral shocks. He also finds that intersectoral shocks are more closely related to the unemployment rate in the later part of the sample considered. Copyright 1997 by University of Chicago Press.

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File URL: http://dx.doi.org/10.1086/209837
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Article provided by University of Chicago Press in its journal Journal of Labor Economics.

Volume (Year): 15 (1997)
Issue (Month): 2 (April)
Pages: 376-401

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Handle: RePEc:ucp:jlabec:v:15:y:1997:i:2:p:376-401
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  1. 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 507-522, June.
  2. Lilien, David M, 1982. "Sectoral Shifts and Cyclical Unemployment," Journal of Political Economy, University of Chicago Press, vol. 90(4), pages 777-793, August.
  3. Jovanovic, Boyan & Moffitt, Robert, 1990. "An Estimate of a Sectoral Model of Labor Mobility," Journal of Political Economy, University of Chicago Press, vol. 98(4), pages 827-852, August.
  4. Mills, Terence C & Pelloni, Gianluigi & Zervoyianni, Athina, 1995. "Unemployment Fluctuations in the United States: Further Tests of the Sectoral-Shifts Hypothesis," The Review of Economics and Statistics, MIT Press, vol. 77(2), pages 294-304, May.
  5. Neal, Derek, 1995. "Industry-Specific Human Capital: Evidence from Displaced Workers," Journal of Labor Economics, University of Chicago Press, vol. 13(4), pages 653-677, October.
  6. Steven J. Davis & John Haltiwanger, 1992. "Gross Job Creation, Gross Job Destruction, and Employment Reallocation," The Quarterly Journal of Economics, Oxford University Press, vol. 107(3), pages 819-863.
  7. S. Lael Brainard & David M. Cutler, 1993. "Sectoral Shifts and Cyclical Unemployment Reconsidered," The Quarterly Journal of Economics, Oxford University Press, vol. 108(1), pages 219-243.
  8. Kevin M. Murphy & Robert H. Topel, 1987. "The Evolution of Unemployment in the United States: 1968 -- 1985," NBER Chapters,in: NBER Macroeconomics Annual 1987, Volume 2, pages 11-68 National Bureau of Economic Research, Inc.
  9. Oi, Walter Y., 1987. "Comment on the relation between unemployment and sectoral shifts," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 27(1), pages 403-420, January.
  10. Beach, Charles M & MacKinnon, James G, 1978. "A Maximum Likelihood Procedure for Regression with Autocorrelated Errors," Econometrica, Econometric Society, vol. 46(1), pages 51-58, January.
  11. Shiller, Robert J, 1981. "Do Stock Prices Move Too Much to be Justified by Subsequent Changes in Dividends?," American Economic Review, American Economic Association, vol. 71(3), pages 421-436, June.
  12. Loungani, Prakash & Rush, Mark & Tave, William, 1990. "Stock market dispersion and unemployment," Journal of Monetary Economics, Elsevier, vol. 25(3), pages 367-388, June.
  13. Oliver Jean Blanchard & Peter Diamond, 1989. "The Beveridge Curve," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 20(1), pages 1-76.
  14. George A. Akerlof & Andrew K. Rose & Janet L. Yellen, 1988. "Job Switching and Job Satisfaction in the U.S. Labor Market," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 19(2), pages 495-594.
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