Business Cycles and Healthcare Employment

64 Pages Posted: 28 Feb 2022 Last revised: 4 Jun 2023

See all articles by Erkmen Giray Aslim

Erkmen Giray Aslim

Grand Valley State University - Seidman School of Business

Shin-Yi Chou

Lehigh University

Kuhelika De

Lacy School of Business, Butler University

Multiple version iconThere are 2 versions of this paper

Date Written: February 2022

Abstract

Is healthcare employment recession proof? We examine the hypothesis that healthcare employment is stable across the business cycle. We explicitly distinguish between a negative aggregate demand and supply shock in studying how healthcare employment responds to recessions, and show that this response depends largely on the type of the exogenous shock triggering the recession. We find that aggregate healthcare employment responds procyclically during demand-induced recessions but remains stable during supply-induced recessions. Further, there is significant heterogeneity in the employment responses of the healthcare sub-sectors. While healthcare employment in most sub-sectors responds procyclically during recessions caused by both negative demand and supply shocks, that in nursing dominant sectors responds countercyclically. However, the procyclical response of sub-sectors and countercyclical response of nursing dominant sectors are both relatively weaker during recessions caused by a negative aggregate supply shock than a demand shock, thus balancing out and contributing to an overall null employment response of the aggregate healthcare sector during recessions caused by a supply shock. More generally, by isolating the recessionary impact of the negative aggregate demand shock from supply shock on healthcare employment, we provide new empirical evidence that healthcare employment in general is not recession proof.

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Suggested Citation

Aslim, Erkmen Giray and Chou, Shin-Yi and De, Kuhelika, Business Cycles and Healthcare Employment (February 2022). NBER Working Paper No. w29799, Available at SSRN: https://ssrn.com/abstract=4045377 or http://dx.doi.org/10.2139/ssrn.4045377

Erkmen Giray Aslim (Contact Author)

Grand Valley State University - Seidman School of Business ( email )

Grand Rapids, MI 49504
United States

Shin-Yi Chou

Lehigh University ( email )

621 Taylor Street
Bethlehem, PA 18015
United States

Kuhelika De

Lacy School of Business, Butler University ( email )

4600 Sunset Avenue
Indianapolis, IN 46208
United States

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