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Weathering the Great Recession: Variation in Employment Responses by Establishments and Countries

Author

Listed:
  • Erling Barth
  • James Davis
  • Richard B. Freeman
  • Sari Pekkala Kerr

Abstract

This paper finds that US employment changed differently relative to output in theGreat Recession and recovery than in most other advanced countries or in the US in earlierrecessions. Instead of hoarding labor, US firms reduced employment proportionately morethan output in the Great Recession, with establishments that survived the downturncontracting jobs massively. Diverging from the aggregate pattern, US manufacturers reducedemployment less than output while the elasticity of employment to gross output varied widelyamong establishments. In the recovery, growth of employment was dominated by job creationin new establishments. The variegated responses of employment to output challenges extantmodels of how enterprises adjust employment over the business cycle.

Suggested Citation

  • Erling Barth & James Davis & Richard B. Freeman & Sari Pekkala Kerr, 2016. "Weathering the Great Recession: Variation in Employment Responses by Establishments and Countries," Working Paper 423946, Harvard University OpenScholar.
  • Handle: RePEc:qsh:wpaper:423946
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    File URL: http://scholar.harvard.edu/freeman/node/423946
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    References listed on IDEAS

    as
    1. Henry Hyatt & James Spletzer, 2013. "The recent decline in employment dynamics," IZA Journal of Labor Economics, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 2(1), pages 1-21, December.
    2. Cazes, Sandrine. & Khatiwada, Sameer. & Malo, Miquel., 2012. "Employment protection and collective bargaining : beyond the deregulation agenda," ILO Working Papers 994719703402676, International Labour Organization.
    3. Lucia Foster & Cheryl Grim & John Haltiwanger, 2016. "Reallocation in the Great Recession: Cleansing or Not?," Journal of Labor Economics, University of Chicago Press, vol. 34(S1), pages 293-331.
    4. Ron S Jarmin & Javier Miranda, 2002. "The Longitudinal Business Database," Working Papers 02-17, Center for Economic Studies, U.S. Census Bureau.
    5. Jeff E. Biddle, 2014. "Retrospectives: The Cyclical Behavior of Labor Productivity and the Emergence of the Labor Hoarding Concept," Journal of Economic Perspectives, American Economic Association, vol. 28(2), pages 197-212, Spring.
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Weathering the Great Recession: Variation in Employment Responses by Establishments and Countries
      by maximorossi in NEP-LTV blog on 2016-07-27 23:07:04

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    Cited by:

    1. Clymo, AJ, 2017. "Heterogeneous Firms, Wages, and the Effects of Financial Crises," Economics Discussion Papers 20572, University of Essex, Department of Economics.

    More about this item

    JEL classification:

    • J0 - Labor and Demographic Economics - - General
    • J00 - Labor and Demographic Economics - - General - - - General
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J10 - Labor and Demographic Economics - - Demographic Economics - - - General
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J70 - Labor and Demographic Economics - - Labor Discrimination - - - General
    • J80 - Labor and Demographic Economics - - Labor Standards - - - General

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