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The Great Recession and Economic Resilience in U.S. Regions

Jaquet, Timothy
http://rave.ohiolink.edu/etdc/view?acc_num=osu1563377722980722

Abstract Details

2019, Doctor of Philosophy, Ohio State University, Agricultural, Environmental and Developmental Economics.
This research examines specific impacts of the Great Recession on local and regional economies across the United States. This recession was the worst economic downturn in the last sixty years, and the first of its kind since modern datasets are available to explore more localized effects. The following essays explore patterns in labor markets that affect wages, regional employment, and firm growth. My first chapter explores how a region’s endowment of natural amenities affects labor market outcomes during an economic downturn. Using national wage and employment data from the Census Bureau and the USDA’s Natural Amenities Scale, I examine how the recession influenced local wage levels across high and low amenity areas. I find the preexisting wage gap between low and high amenity areas that represents the capitalized value of these amenities disappeared during the recession. These results combined with evidence of larger declines in employment in the high amenity areas point towards a relative reduction in labor supply, not increased labor demand, consistent with the results expected from a decrease in the demand for natural amenities. My second chapter examines shifts in the balance of agglomeration and competition among restaurants and retail firms during the recession. For these firms, location choice represents a trade-off between the forces of local spatial competition that push similar firms apart, and the benefits from clustering in the form of shopping externalities. Shopping externalities arise because consumers prefer destinations with a wide variety of goods that minimize their shopping costs. I hypothesize that the recession reduces these shopping externalities through increased competition and income effects on consumers' budgets. Using spatial concentration of firms in the same industry as a signal of higher competition, I classify the level of competition in each firm's local environment based on the number of other firms in the same 6-digit NAICS code. Using a difference-in-differences model, I find that the impact of the recession was larger on firms in high competition areas by 8-8.9% of annual sales, depending on the scale of analysis. Additional models support the conclusion that this effect is due in part to competitive effects, but there is also evidence that shopping externalities were decreased overall with positive spillovers between complementary businesses declining as well. This suggests that the recession's impact on consumer budgets was also in favor of firms in less concentrated areas. My third chapter contributes to more general studies of regional resilience. I propose a framework for defining resilience in empirical studies and use it to evaluate how patterns of employment growth associated with industry structure and county characteristics change during a recession. Using BEA employment data for U.S counties from 2005-2014, I estimate how these factors are associated with growth during the recession compared to the surrounding years of growth. Results support conventional wisdom that manufacturing is particularly sensitive to an economic downturn and that employment in the public sector is associated with greater stability. The results also suggest that human capital plays an even larger role in an area’s employment growth during a recession than during normal business cycles. I fail to find evidence to support previous theories on industrial diversity shielding an area from the recession's impact through a "portfolio effect."
Elena Irwin (Advisor)
Mark Partridge (Committee Member)
Brian Roe (Committee Member)
98 p.
Economics; Regional Studies
regional resilience; natural amenities; economic growth; Great Recession;

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Citations

  • Jaquet, T. (2019). The Great Recession and Economic Resilience in U.S. Regions [Doctoral dissertation, Ohio State University]. OhioLINK Electronic Theses and Dissertations Center. http://rave.ohiolink.edu/etdc/view?acc_num=osu1563377722980722

    APA Style (7th edition)

  • Jaquet, Timothy. The Great Recession and Economic Resilience in U.S. Regions. 2019. Ohio State University, Doctoral dissertation. OhioLINK Electronic Theses and Dissertations Center, http://rave.ohiolink.edu/etdc/view?acc_num=osu1563377722980722.

    MLA Style (8th edition)

  • Jaquet, Timothy. "The Great Recession and Economic Resilience in U.S. Regions." Doctoral dissertation, Ohio State University, 2019. http://rave.ohiolink.edu/etdc/view?acc_num=osu1563377722980722

    Chicago Manual of Style (17th edition)

osu1563377722980722
322
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This open access ETD is published by The Ohio State University and OhioLINK.