Manufacturing Decline, Housing Booms, and Non-Employment

51 Pages Posted: 4 Jun 2013  

Kerwin Kofi Charles

University of Chicago - Irving B. Harris Graduate School of Public Policy Studies

Erik Hurst

University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)

Matthew Notowidigdo

University of Chicago - Booth School of Business

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Date Written: April 1, 2013

Abstract

We exploit cross-city variation in manufacturing decline and housing market changes during the 2000s, and jointly estimate their effects on non-employment. Both forces strongly affected non- employment between 2000 and 2007, with the increase from manufacturing decline almost exactly offset by reductions attributable to housing. We show that this offsetting occurred both in the aggregate and at the individual level. Moreover, we show that the housing bust undid the effects of the preceding housing boom, such that over the entire 2000s housing explains little of the aggregate non-employment increase, while manufacturing explains roughly 40 percent.

JEL Classification: J21, E24, E32, R23

Suggested Citation

Charles, Kerwin Kofi and Hurst, Erik and Notowidigdo, Matthew, Manufacturing Decline, Housing Booms, and Non-Employment (April 1, 2013). Chicago Booth Research Paper No. 13-57. Available at SSRN: https://ssrn.com/abstract=2273684 or http://dx.doi.org/10.2139/ssrn.2273684

Kerwin Kofi Charles

University of Chicago - Irving B. Harris Graduate School of Public Policy Studies ( email )

1155 East 60th Street
Chicago, IL 60637
United States
(773) 834-8922 (Phone)

Erik Hurst

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Matthew Notowidigdo (Contact Author)

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

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