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Analyzing the Link Between Real GDP and Employment: An Industry Sector Approach

Analyzing the Link Between Real GDP and Employment: An Industry Sector Approach Abstract This paper offers insight into the “jobless recovery” phenomenon recently experienced in the U.S. economy by examining industry-sector employment responsiveness to the long-term real GDP expansion occurring during 1991-2001. Two employment models are specified—one using real GDP as the only explanatory variable and the other using real GDP, five additional macroeconomic performance variables, and a time trend as explanatory variables. Monthly data for April 1991–March 2001, and OLSQ regressions are used to derive industry-sector elasticities of employment with respect to real GDP. Empirical results highlight the importance of controlling for non-real GDP macro variables when determining relationships between employment and real GDP. The results identify five industries exhibiting “jobless recovery” characteristics (having negative employment elasticities) and a broad range of employment elasticities across industry categories. The findings may be helpful to business economists modeling their own industry employment and suggest that even during extended periods of real GDP expansion, there may be a case for using industry-specific labor market transition initiatives to assist employment growth. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Business Economics Springer Journals

Analyzing the Link Between Real GDP and Employment: An Industry Sector Approach

Sawtelle, Barbara
Business Economics , Volume 42 (4): 9 – Oct 1, 2007
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Publisher
Springer Journals
Copyright
2007 National Association for Business Economics
ISSN
0007-666X
eISSN
1554-432X
DOI
10.2145/20070405
Publisher site
See Article on Publisher Site

Abstract

Abstract This paper offers insight into the “jobless recovery” phenomenon recently experienced in the U.S. economy by examining industry-sector employment responsiveness to the long-term real GDP expansion occurring during 1991-2001. Two employment models are specified—one using real GDP as the only explanatory variable and the other using real GDP, five additional macroeconomic performance variables, and a time trend as explanatory variables. Monthly data for April 1991–March 2001, and OLSQ regressions are used to derive industry-sector elasticities of employment with respect to real GDP. Empirical results highlight the importance of controlling for non-real GDP macro variables when determining relationships between employment and real GDP. The results identify five industries exhibiting “jobless recovery” characteristics (having negative employment elasticities) and a broad range of employment elasticities across industry categories. The findings may be helpful to business economists modeling their own industry employment and suggest that even during extended periods of real GDP expansion, there may be a case for using industry-specific labor market transition initiatives to assist employment growth.

Journal

Business Economics – Springer Journals

Published: Oct 1, 2007

Keywords: economics, general; political economy/economic systems; business and management, general

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