Kentucky's Labor Market Recovery after the Great Recession

Abstract

The Great Recession negatively impacted all US states, but there was substantial heterogeneity across the country. This study reveals some of this heterogeneity by examining what happened to the labor market in Kentucky and its seven border states, then in Kentucky’s metropolitan statistical areas (MSAs), and finally within the Louisville–Jefferson County MSA, which includes counties in Kentucky and Indiana. We find that Kentucky’s labor force remained below its prerecession level as of September 2015 while the state’s private employment exceeded its prerecession level. Of the states studied, only Indiana and Virginia completely recovered by September 2015 according to both measures. Business starts within Kentucky have also recovered and, along with Missouri, Kentucky stands out as having a stronger entrepreneurial environment postrecession than prerecession. A deeper dive into Kentucky’s MSAs provides evidence that the urban areas of Kentucky experienced stronger recoveries than the rural areas, and that the recoveries of the Kentucky counties within the Louisville–Jefferson County MSA were slightly stronger than the recoveries of the Indiana counties, on average.

Keywords: Labor Market Data, Labor Force, Regional Growth, State Government

JEL Classification: J200, J210, R110, H700