Labor-market polarization over the business cycle

Arbeitspapier

During the last few decades, labor markets in advanced economies have become "polarized" as relative labor demand grows for high- and low-skill workers while it declines for middle-skill workers. This paper explores how polarization has interacted with the U.S. business cycle since the late 1970s. Consistent with previous work, the authors find that recessions are strongly synchronized across workers with different skills. Even high-skill workers favored by polarization suffer during recessions; this is particularly true during the last two downturns. Additionally, there is no evidence that polarization is driving the recent drop in the job-finding rate that has caused an adverse shift in the Beveridge curve. With this synchronization in mind, the authors then investigate the labor-market transitions of unemployed workers during recessions. When job-finding rates fall in recessions, middle-skill workers appear no more apt to leave the labor force or take low- or high-skill jobs than they are during booms. All in all, the results imply that current distress in the U.S. labor market extends far beyond middle-skill workers, and that recessions in general do not induce reallocation of middle-skill workers to jobs with better long-term outlooks.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Public Policy Discussion Papers ; No. 12-8

Classification and Topics

• Classification: Wirtschaft ; Business Fluctuations; Cycles ; Economic Impacts of Globalization: Macroeconomic Impacts ; Human Capital; Skills; Occupational Choice; Labor Productivity ; Labor Turnover; Vacancies; Layoffs ; Unemployment: Models, Duration, Incidence, and Job Search

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Foote, Christopher L. ; Ryan, Richard W.
• Event: Veröffentlichung
• (who): Federal Reserve Bank of Boston
• (where): Boston, MA
• (when): 2012

Further information

• Handle: http://hdl.handle.net/10419/99112
• Last update: 10.03.2025, 11:43 AM CET