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The Short‐Run Relationship Between Sectoral Shifts and U.S. Labor Market Fluctuations

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  • Paul R. Blackley

Abstract

Monthly data for the aggregate U.S. economy are used to assess competing hypotheses concerning the relationship between sectoral employment shifts and fluctuations in the unemployment rate. It is shown that sectoral shifts are caused by major work stoppages, aggregate fluctuations unrelated to permanent sectoral shifts, a reallocation‐timing effect, and allocative shocks at the sectoral level. Larger employment shifts are associated with higher unemployment during slow growth periods and lower unemployment during above‐average growth periods. Models are presented which demonstrate that both aggregate and allocative shocks are causes of cyclical increases in unemployment.

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  • Paul R. Blackley, 1997. "The Short‐Run Relationship Between Sectoral Shifts and U.S. Labor Market Fluctuations," Southern Economic Journal, John Wiley & Sons, vol. 64(2), pages 486-502, October.
    • Handle: RePEc:wly:soecon:v:64:y:1997:i:2:p:486-502
    DOI: 10.1002/j.2325-8012.1997.tb00068.x
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    References listed on IDEAS

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