Explaining Change in County Unemployment Rates in Indiana during the Great Recession and Beyond

Abstract

The specialization of a local area through its industrial employment composition can explain why counties may be more susceptible or insulated to national economic events. This paper examines change in county unemployment rates in Indiana between 2006 and 2015. We find that change in relative employment rates in manufacturing, i.e., relative demand shock, is a significant predictor of change in county unemployment rates, among other relevant industries. In addition, labor mobility tempers fluctuations in local unemployment rates immediately following recession but heightens it as the local economy moves further into recovery. Lastly, more rural counties experience greater fluctuations in unemployment rates in post recovery. (J60, J61, J64)