County-Level Predictors of Employment Loss in and Recovery from the Great Recession

Abstract

During the Great Recession of 2007-2009, the unemployment rate in the United States increased rapidly, reaching almost 9.5% at its peak. We extend a study of the effect of housing net worth on unemployment by Mian and Sufi (2014). Based on factors that contribute to stickiness in unemployment, job fit and geographic mobility, we introduce a continuum variable representing the rural-urban quality of each county; and a binary variable, indicating a county is low-educated. We then demonstrate the effects of the new variables on the time to recovery for unemployment levels by calculating an employment recovery variable using data from the ten years that have elapsed since the recession. Initial housing net worth was not a significant factor in employment recovery after the recession, but the rural-urban county profile and low education variable are both statistically significant. These results have implications for recovery from future recessions. (J64, J43, J61, G51, R23, E24)