The great recession and job loss spillovers: impact of tradable employment shocks on supporting services.

Abstract

This paper explores the spillover effects of job losses via input-output linkages during the Great Recession. Exploiting exogenous variation in tradable employment shocks across US counties, the paper finds that job losses in a county's tradable industries cause further job losses in the county's supporting services. A 10% exogenous decline in tradable employment reduces supporting industries' employment by 3.1%. In addition, a county's regional supporting services are relatively less affected by its tradable job losses than its local supporting services, reinforcing the argument that the spillovers are due to input-output linkages.