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The impact of uncertainty shocks on state-level employment

Author

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  • Hankins, William B.
  • Cheng, Chak Hung Jack
  • Stone, Anna-Leigh

Abstract

Using U.S. data over the period 1960Q3–2019Q4 we estimate a structural factor-augmented vector autoregressive model and find that a one standard deviation shock to macroeconomic uncertainty generates declines in state-level employment growth that range from -0.02 to -0.12 percentage points at their peak negative response. Cross-sectional regressions show that industry mix is an important channel through which uncertainty shocks affect employment growth. In particular, a state with a larger manufacturing sector experiences a larger decline in employment growth.

Suggested Citation

  • Hankins, William B. & Cheng, Chak Hung Jack & Stone, Anna-Leigh, 2022. "The impact of uncertainty shocks on state-level employment," Journal of Macroeconomics, Elsevier, vol. 73(C).
    • Handle: RePEc:eee:jmacro:v:73:y:2022:i:c:s016407042200026x
    DOI: 10.1016/j.jmacro.2022.103426
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    Cited by:

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    More about this item

    Keywords

    FAVAR; Uncertainty; Employment; State-level effects;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

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