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The long and large decline in state employment growth volatility

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  • Gerald Carlino
  • Robert DeFina
  • Keith Sill

Abstract

This study documents a general decline in the volatility of employment growth during the period 1956 to 2005 and examines its possible sources. Estimates from a state-level pooled cross-section/time-series model indicate that aggregate and state-level factors each account for an important share of the total explained variation in state-level volatility. Specifically, state-level factors have contributed as much as 16 percent, while aggregate factors are found to account for up to 46 percent of the variation. With regard to state-level factors, the share of state total employment in manufacturing and state banking deregulation each contributed significantly to fluctuations in volatility. Aggregate factors that are quantitatively important in accounting for volatility include monetary policy, the state of the national business cycle, and oil-price shocks. ; Supersedes Working Paper 07-11/R

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Paper provided by Federal Reserve Bank of Philadelphia in its series Working Papers with number 09-9.

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Date of creation: 2009
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Handle: RePEc:fip:fedpwp:09-9
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Keywords: Employment;

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Cited by:

  1. Owyang, Michael T. & Piger, Jeremy & Wall, Howard J., 2008. "A state-level analysis of the Great Moderation," Regional Science and Urban Economics, Elsevier, vol. 38(6), pages 578-589, November.
  2. Steven J. Davis & James A. Kahn, 2008. "Interpreting the Great Moderation: Changes in the Volatility of Economic Activity at the Macro and Micro Levels," NBER Working Papers 14048, National Bureau of Economic Research, Inc.
  3. Michael T. Owyang & David E. Rapach & Howard J. Wall, 2008. "States and the business cycle," Working Papers 2007-050, Federal Reserve Bank of St. Louis.
  4. Steven J. Davis & James A. Kahn, 2007. "Macroeconomic implications of changes in micro volatility," Proceedings, Federal Reserve Bank of San Francisco, issue Nov.

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