The Evolution of Local Labor Markets After Recessions
Bryan A. Stuart
American Economic Journal: Applied Economics (Forthcoming)
This paper studies how U.S. local labor markets respond to employment losses that occur during
recessions. Following recessions from 1973 through 2009, we find that areas that lose
more jobs during the recession experience persistent relative declines in employment and population.
Most importantly, these local labor markets also experience persistent decreases in
the employment-population ratio, earnings per capita, and earnings per worker. Our results
imply that limited population responses result in longer-lasting consequences for local labor
markets than previously thought, and that recessions are followed by persistent reallocation of
employment across space.