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Demand-driven Propagation: Evidence from the Great Recession

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  • Ha Nguyen

    (The World Bank)

Abstract

This paper presents evidence for the propagation of job losses in the U.S. during the Great Recession. Using county-level tradable job losses (driven by declines in aggregate demand) as an instrument, it shows that retail and restaurant employment fell by 0.34% for every 1% job losses in the rest of the county’s economy. The finding is not driven by the collapse in house price or by credit supply problems. In addition, the spillover is more severe for more income-elastic retail and restaurant industries, which suggest a role for the demand-driven propagation.

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  • Ha Nguyen, 2017. "Demand-driven Propagation: Evidence from the Great Recession," 2017 Meeting Papers 397, Society for Economic Dynamics.
    • Handle: RePEc:red:sed017:397
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    1. Ha Nguyen & Shawheen Rezaei & Divya Agarwal, 2022. "The great recession and job loss spillovers: impact of tradable employment shocks on supporting services," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 68(3), pages 789-815, June.
    2. Joya, Omar & Rougier, Eric, 2019. "Do (all) sectoral shocks lead to aggregate volatility? Empirics from a production network perspective," European Economic Review, Elsevier, vol. 113(C), pages 77-107.
    3. Nguyen,Ha Minh & Nguyen,Huong, 2016. "Unemployment and mortality : evidence from the great recession," Policy Research Working Paper Series 7603, The World Bank.

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