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Reallocation in the Great Recession: Cleansing or Not?

Listed author(s):
  • Lucia Foster
  • Cheryl Grim
  • John Haltiwanger

The high pace of reallocation across producers is pervasive in the U.S. economy. Evidence shows this high pace of reallocation is closely linked to productivity. While these patterns hold on average, the extent to which the reallocation dynamics in recessions are "cleansing" is an open question. We find downturns prior to the Great Recession are periods of accelerated reallocation even more productivity enhancing than reallocation in normal times. In the Great Recession, we find the intensity of reallocation fell rather than rose and the reallocation that did occur was less productivity enhancing than in prior recessions.

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File URL: http://www.nber.org/papers/w20427.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 20427.

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Date of creation: Aug 2014
Publication status: published as Reallocation in the Great Recession: Cleansing or Not? , Lucia Foster, Cheryl Grim, John Haltiwanger. in Labor Markets in the Aftermath of the Great Recession , Card and Mas. 2016
Handle: RePEc:nbr:nberwo:20427
Note: EFG LS PR
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