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The Annals of Regional Science

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18-01-2022 | Original Paper

The great recession and job loss spillovers: impact of tradable employment shocks on supporting services

Authors: Ha Nguyen, Shawheen Rezaei, Divya Agarwal

Published in: The Annals of Regional Science | Issue 3/2022

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Abstract

This paper explores the spillover effects of job losses via input–output linkages during the Great Recession. Exploiting exogenous variation in tradable employment shocks across US counties, the paper finds that job losses in a county’s tradable industries cause further job losses in the county’s supporting services. A 10% exogenous decline in tradable employment reduces supporting industries’ employment by 3.1%. In addition, a county’s regional supporting services are relatively less affected by its tradable job losses than its local supporting services, reinforcing the argument that the spillovers are due to input–output linkages.

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The detailed list of supporting service sectors is in Sect. 4.

See Goldsmith-Pinkham (2020) for a recent analysis of the Bartik instrument, in which they argue the instrument is equivalent to using local industry shares as instruments. See Sect. 6.1 for a detailed discussion in this paper’s context.

Of course, our assumption is more valid during a relatively short period of time. Over the long run, there can be significant changes in the capital share. For example, Graetz and Michaels (2018) document a secular growth in robot use in the economy.

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Title: The great recession and job loss spillovers: impact of tradable employment shocks on supporting services
Authors: Ha Nguyen
Shawheen Rezaei
Divya Agarwal
Publication date: 18-01-2022
Publisher: Springer Berlin Heidelberg
Published in: The Annals of Regional Science / Issue 3/2022
Print ISSN: 0570-1864
Electronic ISSN: 1432-0592
DOI: https://doi.org/10.1007/s00168-021-01104-8

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