¶ Employment hysteresis from the great recession

NBER link

author’s webpage with paper

¶ BibTeX

@article{yagan2019employment,
  title={Employment hysteresis from the great recession},
  author={Yagan, Danny},
  journal={Journal of Political Economy},
  volume={127},
  number={5},
  pages={2505--2558},
  year={2019},
  publisher={The University of Chicago Press Chicago, IL}
}

¶ Abstract

This paper uses US local areas as a laboratory to test for long-term impacts of the Great Recession. In administrative longitudinal data, I estimate that exposure to a 1 percentage point larger 2007–9 local unemployment shock reduced 2015 working-age employment rates by over 0.3 percentage points. Rescaled, this long-term recession impact accounts for over half of the 2007–15 US age-adjusted employment decline. Impacts were larger among older and lower-earning individuals and typically involved a layoff but are present even in a mass-layoffs sample. Disability insurance and out-migration yielded little income replacement. These findings reveal that the Great Recession imposed employment and income losses even after unemployment rates signaled recovery.