WORKING PAPER 09-5

Structural and Cyclical Trends in Net Employment over US Business Cycles, 1949–2009: Implications for the Next Recovery and Beyond

by Jacob Funk Kirkegaard, Peterson Institute for International Economics

August 2009

Jacob Funk Kirkegaard In this working paper, Jacob Kirkegaard expands on the methodology of Groshen and Potter to study cyclical and structural employment changes in the US economy by analyzing US employment trends during the last ten business cycles, from 1949 to the present. Kirkegaard shows that the US manufacturing sector and an increasing number of services sectors, including subsectors of the financial services industry, have been experiencing structural employment declines during the most recent business cycle. Structural employment gains in the US labor market have been increasingly concentrated in the healthcare, education, food, and professional and technical services sectors and in the occupations related to these industries. Kirkegaard concludes that the improved operation of the US labor market during the 1990s has reversed itself in the 2000s, with negative long-term economic consequences for the United States.

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