Jobless Recovery and Structural Change: A VAR Approach

What is it about?

The U.S. has experienced three jobless recoveries since 1990. Meanwhile, finance, health, and education sectors have grown tremendously. This paper uses a Vector Autoregression (VAR) approach to examine if these two phenomena are linked.

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Why is it important?

We empirically show that the fast expansion of finance, health, and education sectors contributes to the onset of jobless recoveries. This finding is important for two reasons. First, recent studies that relate jobless recovery to labor market structural change scant the application of rigorous econometric methods. Second, existing literature has mixed results on linking the two phenomena together.