At the firm level
Salgado and al. use detailed firm-level data on companies in 50 developing and developed countries including the U.S. to study hiring, sales, stock prices and productivity. In particular, they look at employment growth during the most recent two recession years (2001-2002 and 2008-2009) and the boom periods of 2003-2006 and 2010-2014. They find that:
- During economic recessions or booms, the fortunes of a small set of firms hold powerful pointers to the health of the industries they represent, and also the broader economy.
- In particular, a subset of firms does “extremely badly, leading to a left tail of large negative outcomes.” For example, during the 2008 Great Recession, 20% of publicly traded firms represented 80% of the total fall in sales – a disproportionate concentration of firms on the left side if that data were to be plotted on a chart.
Skewed Business Cycles
Authors: Sergio Salgado, Fatih Guvenen, Nicholas Bloom
From: The Wharton School, University of Minnesota, Stanford University
At the employment level
In this paper, Kevin Rinz estimates the effects of exposure to the Great Recession on employment and earnings outcomes for groups of workers who were at different stages of their working lives when the recession started in 2007. His results indicate that workers are affected differently depending on their age:
- Millennials were the group most affected by the Great Recession. Their exposure to the recession reduced educational attainment and made them less likely to work for high-paying employers. As a result, their earnings by 2017 were still lower by $3,000 as compared to their earnings before the Great Recession.
- A similar dynamic emerges for the next youngest workers in Generation X, though the recovery in their employment effects is less stark because they were less than half as severe as the effects for Millennials in absolute terms.
Did Timing Matter? Life Cycle Differences in Effects of Exposure to the Great Recession
Authors: Kevin Rinz
From: Center for Economic Studies
