Regional and Sectoral Evidence of the Macro-Economic Effects of Labor Reallocation: A Panel Data Analysis

Quaderni - Working Paper DSE No. 902

26 Pages Posted: 6 Sep 2013

See all articles by Dimitrios Bakas

Dimitrios Bakas

Nottingham Trent University

Theodore Panagiotidis

University of Macedonia - Department of Economics

Gianluigi Pelloni

University of Bologna - School of Economics, Management, and Statistics

Date Written: July 2013

Abstract

This paper re-examines Lilien’s sectoral shifts hypothesis for U.S. unemployment. We employ a monthly panel that spans from 1990:01 to 2011:12 for 48 U.S. states. Panel unit root tests that allow for cross-sectional dependence reveal the stationarity of unemployment. Within a framework that takes into account dynamics, parameter heterogeneity and cross-sectional dependence in the panel, we show that sectoral reallocation is significant not only at the aggregate level but also at the state level. The magnitude and the statistical significance of the latter as measured by Lilien’s index increases when both heterogeneity and cross-sectional dependence are taken into account.

Keywords: unemployment, sectoral shifts, employment fluctuations, dynamic panel data, parameter heterogeneity, cross-sectional dependence

JEL Classification: C33, E24, E32, J21, R23

Suggested Citation

Bakas, Dimitrios and Panagiotidis, Theodore and Pelloni, Gianluigi, Regional and Sectoral Evidence of the Macro-Economic Effects of Labor Reallocation: A Panel Data Analysis (July 2013). Quaderni - Working Paper DSE No. 902, Available at SSRN: https://ssrn.com/abstract=2321144 or http://dx.doi.org/10.2139/ssrn.2321144

Dimitrios Bakas (Contact Author)

Nottingham Trent University ( email )

Burton Street
NG1 4BU Nottingham
United Kingdom

Theodore Panagiotidis

University of Macedonia - Department of Economics ( email )

Thessaloniki, 54006
Greece

Gianluigi Pelloni

University of Bologna - School of Economics, Management, and Statistics ( email )

Piazza Scaravilli 1
40126 Bologna, 47100
Italy

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