Weathering the Great Recession: Variation in Employment Responses by Establishments and Countries

34 Pages Posted: 25 Jul 2016

See all articles by Erling Barth

Erling Barth

Institute for Social Research, Norway; Department of Economics, University of Oslo; IZA Institute of Labor Economics

James C. Davis

US Census Bureau

Richard B. Freeman

National Bureau of Economic Research (NBER); University of Edinburgh - School of Social and Political Studies; Harvard University; London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP)

Sari Pekkala Kerr

Wellesley College

Date Written: July 2016

Abstract

This paper finds that US employment changed differently relative to output in the Great Recession and recovery than in most other advanced countries or in the US in earlier recessions. Instead of hoarding labor, US firms reduced employment proportionately more than output in the Great Recession, with establishments that survived the downturn contracting jobs massively. Diverging from the aggregate pattern, US manufacturers reduced employment less than output while the elasticity of employment to gross output varied widely among establishments. In the recovery, growth of employment was dominated by job creation in new establishments. The variegated responses of employment to output challenges extant models of how enterprises adjust employment over the business cycle.

Suggested Citation

Barth, Erling and Davis, James C. and Freeman, Richard B. and Kerr, Sari Pekkala, Weathering the Great Recession: Variation in Employment Responses by Establishments and Countries (July 2016). NBER Working Paper No. w22432. Available at SSRN: https://ssrn.com/abstract=2813880

Erling Barth (Contact Author)

Institute for Social Research, Norway ( email )

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Department of Economics, University of Oslo ( email )

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IZA Institute of Labor Economics

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James C. Davis

US Census Bureau ( email )

National Bureau of Economic Research
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Richard B. Freeman

National Bureau of Economic Research (NBER) ( email )

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University of Edinburgh - School of Social and Political Studies ( email )

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Harvard University ( email )

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London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP) ( email )

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Sari Pekkala Kerr

Wellesley College ( email )

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