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The cyclical component of labor market polarization and jobless recoveries in the US

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  • Gaggl, Paul
  • Kaufmann, Sylvia

Abstract

Based on quarterly occupation-level data from the US Current Population Survey for 1976–2013, we exploit common cyclical employment dynamics to identify two clusters of occupations that roughly correspond to the widely discussed notion of “routine” and “non-routine” jobs. After decomposing the cyclical dynamics into a cluster-specific (“structural”) and an occupation-specific (“idiosyncratic”) component, we detect significant structural breaks in the systematic dynamics of both clusters around 1990. We show that, absent these breaks, employment in the three “jobless recoveries” since 1990 would have recovered significantly more strongly than observed in the data, even after controlling for observed idiosyncratic shocks.

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  • Gaggl, Paul & Kaufmann, Sylvia, 2020. "The cyclical component of labor market polarization and jobless recoveries in the US," Journal of Monetary Economics, Elsevier, vol. 116(C), pages 334-347.
    • Handle: RePEc:eee:moneco:v:116:y:2020:i:c:p:334-347
    DOI: 10.1016/j.jmoneco.2019.11.005
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    Cited by:

    1. Sylvia Kaufmann, 2014. "K-state switching models with time-varying transition distributions – Does credit growth signal stronger effects of variables on inflation?," Working Papers 14.04, Swiss National Bank, Study Center Gerzensee.
    2. Masao Fukui & Emi Nakamura & Jón Steinsson, 2023. "Women, Wealth Effects, and Slow Recoveries," American Economic Journal: Macroeconomics, American Economic Association, vol. 15(1), pages 269-313, January.
    3. Paker, Meredith M., 2023. "The jobless recovery after the 1980–1981 British recession," Explorations in Economic History, Elsevier, vol. 90(C).
    4. Zhang, Wen, 2019. "Deciphering the causes for the post-1990 slow output recoveries," Economics Letters, Elsevier, vol. 176(C), pages 28-34.
    5. Sylvia Kaufmann, 2016. "Hidden Markov models in time series, with applications in economics," Working Papers 16.06, Swiss National Bank, Study Center Gerzensee.
    6. Nir Jaimovich, 2015. "The Research Agenda: Nir Jaimovich on The changing nature of business cycles," EconomicDynamics Newsletter, Review of Economic Dynamics, vol. 16(2), November.

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    More about this item

    Keywords

    Employment polarization; Jobless recoveries; Dynamic factor models;
    All these keywords.

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

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