The paper summarized here is part of the Spring 2024 edition of the Brookings Papers on Economic Activity (BPEA), the leading conference series and journal in economics for timely, cutting-edge research about real-world policy issues. The conference draft of this paper was presented at the Spring 2024 BPEA Conference on March 28-29, 2024 (conference drafts, recordings, and slides are available via the link). Submit a proposal to present at a future BPEA conference here.
Final version posted: November 2024
Download final paper with discussant comments, discussion summary, and appendix
A new historical dataset of state unemployment rates shows that, except for the COVID-19 recession, states in recent decades have had increasingly similar experiences in the timing and severity of downturns, according to a paper discussed at the Brookings Papers on Economic Activity (BPEA) conference on March 29. The Bureau of Labor Statistics has reported monthly unemployment rates for states since January 1976. The authors of the paper—Andrew J. Fieldhouse of Texas A&M University, David Munro of Middlebury College, Christoffer Koch of Empirical Research Partners LLC, and Sean Howard—developed alternative state-level unemployment rates back to January 1947 by digitizing new and continuing unemployment insurance claims from historical reports previously published by the Department of Labor and the Social Security Administration. Their paper—”The Emergence of a Uniform Business Cycle in the United States: Evidence from New Claims-Based Unemployment Data”—documents two important trends highlighted by the new datatset: First, a more uniform, and slower, pace of recovery has emerged since the 1960s. Unemployment nationally has recovered more gradually in recent decades while state unemployment rates have converged. Second, interstate migration, with unemployed workers moving to states with more plentiful jobs, has not significantly spurred recoveries since the mid-1980s.
The authors attribute the slowing and convergence of recovery rates to several factors, including a shift from manufacturing to less-volatile services in the economy, the industrial composition of states growing more similar, and the increased integration of the national economy. As a result, workers have much less incentive to move when they lose a job. “If there aren’t greener pastures elsewhere, why migrate,” Munro said in an interview with The Brookings Institution. According to Fieldhouse, the paper’s findings have important implications for economic stabilization policy. On the one hand, a more uniform business cycle argues for a stronger role for the federal government, through fiscal policy (tax cuts and spending programs) and the Federal Reserve’s monetary policy. On the other hand, because jobless workers are no longer moving to other states, state-level policies targeting weak local labor markets are important. The authors note that the most recent business cycle—the deep but short recession in 2020 during the early months of the COVID pandemic and the ongoing recovery since then—is the exception to the convergence trend they document over the past 60 years. “States had very different experiences during the COVID recession,” Fieldhouse said in an interview. “The disease affected states differentially—with different timing, different vaccination rates and differing lockdown policies. In-person services got walloped. States like Nevada, dependent on tourism, got walloped while other states were not as exposed to in-person services.”
CITATION
Fieldhouse, Andrew J., David Munro, Christoffer Koch, and Sean Howard. 2024. “The Emergence of a Uniform Business Cycle in the United States: Evidence from New Claims-Based Unemployment Data.” Brookings Papers on Economic Activity, Spring: 265–319.
Davis, Steven J. 2024. “Comment on ‘The Emergence of a Uniform Business Cycle in the United States: Evidence from New Claims-Based Unemployment Data.’” Brookings Papers on Economic Activity, Spring: 320–326.
Kudlyak, Marianna. 2024. “Comment on ‘The Emergence of a Uniform Business Cycle in the United States: Evidence from New Claims-Based Unemployment Data.’” Brookings Papers on Economic Activity, Spring: 326–337.
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Acknowledgements and disclosures
David Munro received support from MiddData, a data science initiative at Middlebury College. Christoffer Koch was a former employee of the International Monetary Fund whose communications department had the right to review this work prior to publication but did not inform the findings. Other than the aforementioned, the authors did not receive financial support from any firm or person for this paper or from any firm or person with a financial or political interest in this paper. The authors are not currently an officer, director, or board member of any organization with a financial or political interest in this paper.
The authors thank the editors Jón Steinsson and Janice Eberly and discussants Steven Davis and Marianna Kudlyak for helpful comments and suggestions. They also thank seminar and conference participants at the ASSA 2023 Annual Meeting, Economic Statistics Centre of Excellence Conference on Economic Measurement 2023, Southern Economic Association 2022 Annual Meeting, Midwest Macroeconomics Conference, Liberal Arts Macroeconomics Conference, University of Alberta, Middlebury College, and Liberal Arts Macro-Labor group for constructive feedback. The authors are especially grateful to Erica Cooper of the Department of Labor for providing digital scans of historical reports. They also thank Marianna Kudlyak and Jeremy Piger for providing data and Christopher House, Andrea Foschi, Linda Tesar, and Christian Pröbsting for helpful comments. David Munro gratefully acknowledges funding received from MiddData during work on this project. The views expressed in this paper are the views of the authors only and do not necessarily reflect the views of the Federal Reserve Bank of Dallas, the Federal Reserve System, or the International Monetary Fund, its executive board, or its management. A previous draft was circulated as “A New Claims-Based Unemployment Dataset: Application to Postwar Recoveries across U.S. States.”
David Skidmore authored the summary language for this paper. Chris Miller assisted with data visualization.
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