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The long and large decline in state employment growth volatility

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  • Gerald A. Carlino
  • Robert H. 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

Suggested Citation

  • Gerald A. Carlino & Robert H. DeFina & Keith Sill, 2009. "The long and large decline in state employment growth volatility," Working Papers 09-9, Federal Reserve Bank of Philadelphia.
    • Handle: RePEc:fip:fedpwp:09-9
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    References listed on IDEAS

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    Cited by:

    1. Hasan Engin Duran, 2015. "Regional Employment Volatility In Turkey: Causes And Consequences," Working Papers 2015/06, Turkish Economic Association.
    2. 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.
    3. Steven J. Davis & James A. Kahn, 2008. "Interpreting the Great Moderation: Changes in the Volatility of Economic Activity at the Macro and Micro Levels," Journal of Economic Perspectives, American Economic Association, vol. 22(4), pages 155-180, Fall.
    4. Owyang, Michael T. & Rapach, David E. & Wall, Howard J., 2009. "States and the business cycle," Journal of Urban Economics, Elsevier, vol. 65(2), pages 181-194, March.
    5. Rizwan Khalid & Choudhry Tanveer Shehzad & Bushra Naqvi, 2023. "Impact of capital account liberalization on stock market crashes," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(4), pages 3700-3726, October.
    6. Ma, Rui & Marshall, Ben R. & Nguyen, Hung T. & Nguyen, Nhut H. & Visaltanachoti, Nuttawat, 2022. "Climate events and return comovement," Journal of Financial Markets, Elsevier, vol. 61(C).
    7. Steven J. Davis & James A. Kahn, 2007. "Macroeconomic implications of changes in micro volatility," Proceedings, Federal Reserve Bank of San Francisco, issue Nov.
    8. Hasan Engin Duran & Ugo Fratesi, 2023. "Economic resilience and regionally differentiated cycles: Evidence from a turning point approach in Italy," Papers in Regional Science, Wiley Blackwell, vol. 102(2), pages 219-252, April.
    9. Hasan Engin Duran, 2019. "Structural change and output volatility reduction in OECD countries: evidence of the Second Great Moderation," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 8(1), pages 1-14, December.

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