Hostname: page-component-586b7cd67f-t7fkt Total loading time: 0 Render date: 2024-11-26T08:06:42.975Z Has data issue: false hasContentIssue false
  • English
  • Français

WHAT EXPLAINS THE RECENT JOBLESS RECOVERIES?

Published online by Cambridge University Press:  18 January 2016

Irina B. Panovska
Irina B. Panovska*
Affiliation:
Lehigh University
*
Address correspondence to: Irina B. Panovska, Department of Economics, Lehigh University, 621 Taylor Street, RBC 457, Bethlehem, PA 18015, USA; e-mail: [email protected].
Rights & Permissions [Opens in a new window]

Abstract

Core share and HTML view are not available for this content. However, as you have access to this content, a full PDF is available via the ‘Save PDF’ action button.

This paper considers a correlated unobserved-components model for output, employment, and hours in order to disentangle the causes for the last three jobless recoveries. The composition of the structural shocks during recessions and the periods immediately following recessions has changed, as have the responses of employment and hours to those shocks. Recessions before 1984 were followed by recoveries driven by positive permanent shocks to output, whereas post-1984 recessions were followed by weak recoveries in demand. Employment is more sensitive to demand shocks post-1984, leading to weak recoveries in employment. In addition, hours and employment were complements before 1984, but are treated as substitutes after 1984. Much of the initial decrease in demand is now absorbed on the intensive margin.

Keywords

Jobless RecoveriesLabor MarketsUnobserved Components
Type
Articles
Information
Macroeconomic Dynamics , Volume 21 , Issue 3 , April 2017 , pp. 708 - 732
Copyright
Copyright © Cambridge University Press 2016 

Footnotes

I thank two anonymous referees, Luiggi Donayre, Yunjong Eo, Steven Fazzari, James Morley, Werner Ploberger, Raul Santaeulalia-Llopis, Tara Sinclair, and seminar participants at the University of Queensland, Monash University, the University of Auckland, Illinois State University, Bank of Canada, West Virginia University, Georgia State University, the University of Illinois Urbana–Champaign, Lehigh University, Miami University, and North Dakota State University. I would also like to thank the participants at the 2013 WEAI, the 2013 SBIES NBER NSF Seminar, the 2012 SNDE, the 2012 CEF, the 2012 MEG, and the Washington University Macroeconomics Working Group for helpful comments and discussions. I gratefully acknowledge the support of the Department of Economics and the Graduate School of Arts and Sciences at Washington University, and of the Olin Fellowship program.

References

REFERENCES

Andolfatto, D. and Macdonald, G. (2005) Jobless Recoveries. Washington University in St. Louis working paper.Google Scholar
Bachmann, R. (2012) Understanding the Jobless Recoveries after 1991 and 2001. University of Notre Dame working paper.Google Scholar
Barnichon, R. (2010) Productivity and unemployment over the business cycle. Journal of Monetary Economics 57, 1013–1025.CrossRefGoogle Scholar
Basistha, A. (2009) Hours per capita and productivity: Evidence from correlated unobserved components model. Journal of Applied Econometrics 24, 187–206.CrossRefGoogle Scholar
Berger, D. (2012) Countercyclical Restructuring and Jobless Recoveries. Yale University working paper.Google Scholar
Burger, J. and Schwartz, J. (2015) Productive recessions and jobless recoveries. Contemporary Economic Policy 3 (4), 636–648.CrossRefGoogle Scholar
Engemann, K.M. and Owyang, M.T. (2010) Whatever happened to the business cycle? A Bayesian analysis of jobless recoveries. Macroeconomic Dynamics 14, 709–726.Google Scholar
Faberman, R.J. (2008) Job Flows, Jobless Recoveries, and the Great Moderation. Philadelphia Federal Reserve Bank working paper.Google Scholar
Francis, N., Jackson, L., and Owyang, M. (2013) Countercyclical Policy and the Speed of Recovery after Recessions. Federal Reserve Bank of St. Louis working paper.CrossRefGoogle Scholar
Francis, N. and Ramey, V. (2009) A century of work and leisure. American Economic Journal: Macroeconomics 1 (2), 189–224.Google Scholar
Gali, J. (1999) Technology, employment, and the business cycle: Do technology shocks explain aggregate fluctuations? American Economic Review 89, 249–271.Google Scholar
Gali, J. and Rabanal, P. (2004) Technology shocks and aggregate fluctuations: How well does the real business cycle model fit postwar U.S. data? NBER Macroeconomics Annual 19, 225–228.Google Scholar
Gali, J., Smets, F., and Wouters, R. (2012) Slow Recoveries: A Structural Interpretation. NBER Working Paper 18085.Google Scholar
Gali, J. and van Rens, T. (2010) The Vanishing Procyclicality of Labor Productivity. Working paper.CrossRefGoogle Scholar
Garin, J.M. Pries and Sims, E. (2013) Reallocation and the Changing Nature of Economic Fluctuations. University of Notre Dame working paper.Google Scholar
Gomme, P. (2005) Accounting for the Jobless Recoveries. Federal Reserve Bank of Cleveland working paper.Google Scholar
Groshen, E.L. and Potter, S. (2003) Has structural change contributed to a jobless recovery? Current Issues in Economics and Finance 9, 1–7.Google Scholar
Hodgson, A., Schreft, S.L., and Singh, A. (2005) Jobless recoveries and the wait-and-see hypothesis. Federal Reserve Bank of Kansas City Economic Review 90, 81–99.Google Scholar
Jaimovich, N. and Siu, H.E. (2012) The Trend Is the Cycle: Job Polarization and Jobless Recoveries. Duke University working paper.CrossRefGoogle Scholar
Kahn, J. and Rich, R. (2007) Tracking the new economy: Using growth theory to detect changes in trend productivity. Journal of Monetary Economics 54, 1670–1701.Google Scholar
Kim, C.J., Morley, J., and Piger, J. (2008) Bayesian counterfactual analysis of the sources of the Great Moderation. Journal of Applied Econometrics 23, 615–638.CrossRefGoogle Scholar
Kim, C.J. and Nelson, C. (1999) Has the U.S. economy become more stable? A Bayesian approach based on a Markov-switching model of the business cycle. Review Of Economics and Statistics 81, 608–616.CrossRefGoogle Scholar
Klinger, S. and Weber, E. (2015) On GDP–Employment Decoupling in Germany: A Contribution to Explaining the Productivity Puzzle. Institute for Employment Research (IAB) working paper.Google Scholar
Koenders, K. and Rogerson, R. (2005) Organizational dynamics and the business cycle: A view on jobless recoveries. Federal Reserve Bank of St. Louis Review 87 (4), 555–579.Google Scholar
McConnell, M.M. and Perez-Quiros, G.. (2000) Output fluctuations in the United States: What has changed since the early 1980's? American Economic Review 90, 1464–1676.Google Scholar
Morley, J., Nelson, C., and Zivot, E. (2003) Why are Beveridge–Nelson and unobserved-component decompositions of GDP so different? Review of Economics and Statistics 85, 235–243.Google Scholar
Morley, J. and Singh, A. (in press) Inventory shocks and the Great Moderation. Journal of Money, Credit and Banking.Google Scholar
Ramey, V.A. and Vine, D.J. (2006) Declining volatility in the U.S. automobile industry. American Economic Review 96, 1876–1889.Google Scholar
Rios-Rull, J.V. and Santaeulalia-Llopis, R. (2010) Redistributive shocks and productivity shocks. Journal of Monetary Economics 57, 931–948.Google Scholar
Santaeulalia-Llopis, R. (2012) How Much are SVARs with Long-Run Restrictions Missing without Cyclically Moving Factor Shares? Washington University in St. Louis working paper.Google Scholar
Schreft, S.L. and Singh, A. (2003) A closer look at Jobless recoveries. Federal Reserve Bank of Kansas City Economic Review 88, 45–73.Google Scholar
Sinclair, T. (2009) The relationships between permanent and transitory movements in U.S. output and the unemployment rate. Journal of Money, Credit and Banking 88, 529–542.Google Scholar
Sinclair, T. (2010) Asymmetry in the business cycle: Friedman's plucking model with correlated innovations. Studies in Nonlinear Dynamics and Econometrics 14 (1), Article 3.Google Scholar
Stock, J. and Watson, M. (2012) Disentangling the Channels of the 2007–2009 Recession. Princeton University working paper.Google Scholar
Supplementary material: PDF

Panovska supplementary material

Panovska supplementary material 1

Download Panovska supplementary material(PDF)
PDF 590.2 KB