Hysteresis in the Labor Market
Saturday, Jan. 5, 2019 8:00 AM - 10:00 AM
- Chair: Laurence Ball, Johns Hopkins University
Some Like It Hot: Assessing Longer-Term Labor Market Benefits from a High-Pressure Economy
AbstractThis paper explores the evidence for positive hysteresis in the labor market. Using data from the National Longitudinal Surveys of Youth, we find that negative labor market outcomes during high-unemployment periods are mitigated by exposure to a high-pressure economy during the preceding expansion. Breaking total exposure into average intensity and duration suggests that these two dimensions have differing impacts depending on the outcome. Additionally, benefits are typically only statistically significantly different from no exposure for only a relatively few demographic groups.
Hysteresis in Employment Among Disadvantaged Workers
AbstractWe examine hysteresis in employment-to-population ratios among less-educated men using state-level data. Results from dynamic panel regressions indicate a moderate degree of hysteresis: The effects of past employment rates on subsequent employment rates can be substantial but essentially dissipate within three years. This finding is robust to a number of variations. We find no substantial asymmetry in the persistence of high vs. low employment rates. The cumulative effect of hysteresis in the business cycle surrounding the 2001 recession was mildly positive, while the effect in the cycle surrounding the 2008–09 recession was, through 2016, decidedly negative. Additional simulations suggest that the employment benefits of temporarily running a “high-pressure” economy are small.
Labor Market Persistence: A Cohort-level Analysis
- E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy
- J2 - Demand and Supply of Labor