IDEAS home Printed from https://ideas.repec.org/p/iza/izadps/dp17276.html
   My bibliography  Save this paper

Impact of Stock Market Manias and Panics on the U.S. Labor Market

Author

Listed:
  • Waithaka, Douglas Mwangi

    (Zurich University of Applied Sciences (ZHAW))

  • Kendzia, Michael Jan

    (Zurich University of Applied Sciences (ZHAW))

Abstract

History teaches valuable lessons. This article examines the performance of the stock market during various boom and bust phases over the last forty years in the United States. By doing so, four previous manias and panics scenarios are analyzed, including the 1987 black Monday crash, the Dotcom bubble in the early 2000s, the 2008 financial crisis, and the 2019 Covid pandemic. At the same time, the unemployment rate, the growth domestic product (GDP) per capita growth rate, the conference board's leading economic index and the wages growth rate are considered. Econometric models were finally used to study the markets relationships. The study finds that the labor market lags the stock market during manias and panics, supporting the hypothesis of a delayed response in the labor market. The unemployment rate reacted particularly late to the black Monday crash, the Dotcom bubble and the 2008 financial crisis. The leading economic index followed the stock market closest and with the slightest lag. Wages growth rate and the growth domestic product per capita growth rate reacted with varying degrees to each mania and panic episodes.

Suggested Citation

  • Waithaka, Douglas Mwangi & Kendzia, Michael Jan, 2024. "Impact of Stock Market Manias and Panics on the U.S. Labor Market," IZA Discussion Papers 17276, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp17276
    as

    Download full text from publisher

    File URL: https://docs.iza.org/dp17276.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Maximilian-Benedikt Herwarth Kohn & Pedro L. Valls Pereira, 2017. "Speculative bubbles and contagion: Analysis of volatility’s clusters during the DotCom bubble based on the dynamic conditional correlation model," Cogent Economics & Finance, Taylor & Francis Journals, vol. 5(1), pages 1411453-141, January.
    2. Journal of Economics Library, 2017. "New Economics Books," Journal of Economics Library, KSP Journals, vol. 4(3), pages 404-450, September.
    3. Patricia C. Mosser, 2020. "Central bank responses to COVID-19," Business Economics, Palgrave Macmillan;National Association for Business Economics, vol. 55(4), pages 191-201, October.
    4. Journal of Economics Library, 2017. "New Economics Books," Journal of Economics Library, KSP Journals, vol. 4(4), pages 574-620, December.
    5. Journal of Economics Library, 2015. "New Economics Books," Journal of Economics Library, KSP Journals, vol. 2(3), pages 214-284, September.
    6. Ryan McKeon & Jeffry Netter, 2009. "What caused the 1987 stock market crash and lessons for the 2008 crash," Review of Accounting and Finance, Emerald Group Publishing Limited, vol. 8(2), pages 123-137, May.
    7. Stijn Claessens & M. Ayhan Kose & Marco E. Terrones, 2009. "What happens during recessions, crunches and busts? [Business cycles for G-7 and European countries]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 24(60), pages 653-700.
    8. Journal of Economics Library, 2017. "New Economics Books," Journal of Economics Library, KSP Journals, vol. 4(2), pages 241-287, June.
    9. Journal of Economics Library, 2015. "New Economics Books," Journal of Economics Library, KSP Journals, vol. 2(4), pages 380-426, December.
    10. Journal of Economics Library, 2017. "New Economics Books," Journal of Economics Library, KSP Journals, vol. 4(1), pages 83-129, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Usenata, Nnyeneime, 2022. "Does corruption cause income inequality and long-run poverty?(Evidence from Nigeria)," MPRA Paper 113588, University Library of Munich, Germany.
    2. John Komlos, 2021. "Macroeconomic Inequality from Reagan to Trump. Market Power, Wage Repression, Asset Price Inflation, and Industrial Decline," The Economic Record, The Economic Society of Australia, vol. 97(318), pages 450-453, September.
    3. Juan Grigera, 2022. "Adding Insult to Injury: The COVID‐19 Crisis Strikes Latin America," Development and Change, International Institute of Social Studies, vol. 53(6), pages 1335-1361, November.
    4. Zoltan J. Acs & Saul Estrin & Tomasz Mickiewicz & László Szerb, 2018. "Entrepreneurship, institutional economics, and economic growth: an ecosystem perspective," Small Business Economics, Springer, vol. 51(2), pages 501-514, August.
    5. Gbenga Wilfred Akinola & Abieyuwa Ohonba, 2024. "The Effects of External Debt and Foreign Direct Investment on Economic Growth in Nigeria," Economies, MDPI, vol. 12(6), pages 1-23, June.
    6. Edward L. Glaeser, 2020. "Urbanization and its Discontents," NBER Working Papers 26839, National Bureau of Economic Research, Inc.
    7. Giampaolo Bonomi & Nicola Gennaioli & Guido Tabellini, 2021. "Identity, Beliefs, and Political Conflict," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 136(4), pages 2371-2411.
    8. Muhammad Zeeshan Younas & Rashid Mehmood, 2018. "Examining the Efficiency of American Stock Exchange NASDAQ: An empirical analysis of the Market Efficiency Hypothesis," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 7(3), pages 132-137, September.
    9. Vasiliki A. Basdekidou & Artemis A. Styliadou, 2017. "Corporate Social Responsibility Performance & ETF Historical Market Volatility," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 9(10), pages 30-39, October.
    10. Bista, Raghu, 2019. "Future Connectivity Chinese One Belt, One Road: Prospects and Implications to Nepal," MPRA Paper 100068, University Library of Munich, Germany, revised 05 Dec 2019.
    11. repec:prg:jnlpep:v:preprint:id:646:p:1-21 is not listed on IDEAS
    12. John Komlos, 2018. "Reaganomics: A Historical Watershed," CESifo Working Paper Series 7301, CESifo.
    13. Mirzabaev, Alisher, 2021. "Impacts of Extreme Weather Events Under Changing Climate on Household Consumption and Assets Inequality in Uganda," 2021 Conference, August 17-31, 2021, Virtual 315872, International Association of Agricultural Economists.
    14. Victor H Mlambo, 2018. "Cross-border Migration in the Southern African Development Community (SADC): Benefits, Problems and Future prospects," Journal of Social and Development Sciences, AMH International, vol. 8(4), pages 42-56.
    15. Charles M. A. Clark, 2020. "Editor’s Introduction: Catholic Social Thought and Work," American Journal of Economics and Sociology, Wiley Blackwell, vol. 79(4), pages 1073-1084, September.
    16. Komlos John, 2019. "Reaganomics: A Watershed Moment on the Road to Trumpism," The Economists' Voice, De Gruyter, vol. 16(1), pages 1-21, December.
    17. Andreas Hendricks & Peter Lacoere & Erwin van der Krabben & Cynthia Oorschot, 2021. "Limits of Negotiable Developer Obligations," Sustainability, MDPI, vol. 13(20), pages 1-20, October.
    18. Dirk Schoenmaker & Willem Schramade, 2019. "Investing for long-term value creation," Journal of Sustainable Finance & Investment, Taylor & Francis Journals, vol. 9(4), pages 356-377, October.
    19. Anna Y. Veretennikova & Daria A. Selezneva, 2023. "Development of Regulatory Strategies in the Sharing Economy: The Application of Game Theory," Economies, MDPI, vol. 11(12), pages 1-18, December.
    20. Williams, Gary W. & Capps Jr., Oral, 2020. "Generic promotion of Norwegian seafood exports," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 23(3), August.
    21. Saima Husain & Amber G. Rashid, 2018. "Exploring brand symbolism amongst 10 year-old urban Pakistani children," Business Review, School of Economics and Social Sciences, IBA Karachi, vol. 13(2), pages 117-131, July-Dece.

    More about this item

    Keywords

    S&P 500; leading economic index; wage growth rate; unemployment rate;
    All these keywords.

    JEL classification:

    • B23 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Econometrics; Quantitative and Mathematical Studies
    • B27 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - International Trade and Finance
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp17276. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Holger Hinte (email available below). General contact details of provider: https://edirc.repec.org/data/izaaade.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.