Demand-Driven Propagation : Evidence from the Great Recession

This paper provides empirical evidence for the Keynesian demand-driven propagation: initial rounds of job losses lead to additional rounds of job losses. The paper shows that U.S. counties with higher pre-existing exposure to tradable industries experienced larger job losses in non-tradable sectors during the Great Recession. This was arguably because laid-off tradable workers cut their consumption, which hurts local non-tradable firms. The finding is not driven by exposure to the construction sector, by the collapse in house prices, or by credit supply problems. In addition, the spillover is stronger when the focus is on the job losses of more income-elastic non-tradable sectors.

Bibliographic Details

Main Author:	Nguyen, Hu
Format:	Working Paper biblioteca
Language:	English en_US
Published:	World Bank, Washington, DC 2015-10
Subjects:	JOBS, EMPLOYMENT, MONETARY POLICY, STORE, MULTIPLIERS, PRODUCTION, FINANCING, RETIREMENT, MINIMUM WAGE, INCOME, SERVICE SECTOR, INTEREST RATE, LIQUIDITY, EXPORTS, ELASTICITY, HEALTH CARE, POLITICAL ECONOMY, RECESSION, JOB, COMPANIES, EFFECTS, INCENTIVES, HEALTH, ECONOMIC POLICY, LABOR ECONOMICS, RISING UNEMPLOYMENT, LOAN, VARIABLES, LABOR STATISTICS, WEALTH, JOB LOSSES, BANK LENDING, CHOICE, LABOR MARKET, KEYNESIAN ECONOMICS, GOVERNMENT REGULATIONS, UNEMPLOYED WORKERS, WAGE ADJUSTMENT, WORKER, UNEMPLOYED, JOB LOSS, DEBT, MARKETS, HOUSEHOLD INCOME, LABOR MARKET OUTCOME, ORGANIZATIONS, BUSINESS CYCLE, LABOR, TOTAL EMPLOYMENT, FINANCE, STORES, TAXES, AGGREGATE DEMAND EFFECTS, UNEMPLOYMENT, CONSUMPTION, FIRMS, WORKERS, WAGES, POLICIES, LOCAL LABOR MARKETS, UNEMPLOYMENT RATE, WAGE RIGIDITY, LABOR DEMAND, HIGH EMPLOYMENT, CARE, CREDIT, MACROECONOMICS, ECONOMIC SECTORS, PURCHASING POWER, DEMAND, NOMINAL WAGES, AGGREGATE DEMAND, CONSUMERS, ENTERPRISE, EMPLOYMENT GROWTH, DOWNWARD BIAS, MARKET, BENCHMARK, ECONOMICS, SERVICE INDUSTRY, MACROECONOMIC EFFECTS, MANUFACTURING INDUSTRIES, GOODS, THEORY, INVESTMENT, POVERTY, CRISES, SUPPLY, INNOVATION, POPULATION, LABOR SUPPLY, BORROWING, LENDING, LOCAL LABOR MARKET, ECONOMIC HISTORY, FULL EMPLOYMENT, LABOR MARKETS, SEE, LABOR SHARE, PRICES, LABOR REALLOCATION, DEVELOPMENT POLICY,
Online Access:	http://documents.worldbank.org/curated/en/2015/10/25202680/demand-driven-propagation-evidence-great-recession http://hdl.handle.net/10986/22869
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