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Regional Variations in Cyclical Employment

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  • M I Howland

    (Institute for Urban Studies, University of Maryland, College Park, MD 20742, USA)

Abstract

In this paper the author develops and tests a model of regional responses to national business-cycles. The model divides cyclical decline in each state into two sectors: a basic sector and a nonbasic sector. The industrial mix, capital—labor ratio, age of capital stock, level of unemployment insurance benefits, labor shortage, and extent of labor-force unionization of a state are hypothesized to influence the response to national recessions by the economy of a state. Employment decline in the nonbasic sector of the economy of a state is a function of employment decline in basic industries and is transmitted through a short-run multiplier. The model is tested on data from five post World War 2 recessions between 1950 and 1975. The findings indicate that industry mix at the two-digit Standard Industrial Code level explains 36% of the across-state variation in cyclical employment. The results also indicate that an old capital-stock, a nonunion labor force, and generous unemployment insurance benefits promote cyclical stability in state economies.

Suggested Citation

  • M I Howland, 1984. "Regional Variations in Cyclical Employment," Environment and Planning A, , vol. 16(7), pages 863-877, July.
    • Handle: RePEc:sae:envira:v:16:y:1984:i:7:p:863-877
    DOI: 10.1068/a160863
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    References listed on IDEAS

    as
    1. George H. Borts, 1960. "Regional Cycles of Manufacturing Employment in the United States, 1914-1953," NBER Books, National Bureau of Economic Research, Inc, number bort60-1, July.
    2. Feldstein, Martin S, 1978. "The Effect of Unemployment Insurance on Temporary Layoff Unemployment," American Economic Review, American Economic Association, vol. 68(5), pages 834-846, December.
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