This paper uses two large datasets built from quarterly labor force surveys to provide a global perspective on labor market downturns. The distribution of the severity and duration of labor market downturns is strongly right skewed. The longest and most severe downturns are associated with crises, particularly financial crises, sudden stops, and house price busts. Manufacturing and construction are key sectors for propagation, as they account for more than half of the total decline in employment. Labor market downturns fall most on young and less-educated workers, who are less able to self-insure against idiosyncratic earnings risk.
Authors
Kevin Donovan, Will Jianyu Lu, Joseph H. Pedtke, Todd Schoellman
- Acknowledgements & Disclosure
- This paper has benefited from comments from conference and seminar participants at Edinbugh, EUI, Autonoma de Barcelona, Toronto Metropolitan University, University of Georgia, Johns Hopkins SAIS, UC – Irvine, University of Melbourne, University of New South Wales, Ohio State, the 2nd Annual Labor Markets and Macroeconomics Conference hosted by LAEF, and the 2023 Society for Economic Dynamics meetings. The views expressed herein are those of the authors and not necessarily those of the Central Bank of Chile, its Board members, the Federal Reserve Bank of Minneapolis, the Federal Reserve System, or the data providers. Aggregated results, code, and documentation are available online at www.lfsdata.com. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
- DOI
- https://doi.org/10.3386/w33061
- Pages
- 60
- Published in
- United States of America
Table of Contents
- Introduction 3
- Data 6
- Aggregate Data Set 7
- Micro Data Set 9
- Recessions and Aggregate Labor Market Outcomes 10
- Characteristics of Severe Labor Market Downturns 12
- Defining Crises 12
- Severe Labor Market Downturns and Crises 14
- Heterogeneity in Labor Market Downturns 20
- Labor Market Anatomy of Crises 23
- Propagation through Labor Markets 24
- Sectoral Dimensions of Crises 27
- Distributional Consequences of Crises 29
- Conclusion 32
- Data Details 40
- Coverage by Country 40
- Coverage by Type of Crisis 44
- Additional Results 45
- Results for Additional Types of Crises 45
- Great Recession 48
- COVID-19 50
- Comparison of Results, Aggregate and Micro Data Sets 52
- Additional Results on Self-Employment 54
- Additional Results on Industry Employment Trends 57
