Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/280512 
Year of Publication: 
2013
Series/Report no.: 
AEI Economics Working Paper No. 2013-05
Publisher: 
American Enterprise Institute (AEI), Washington, DC
Abstract: 
We create a state-level measure of economic and police uncertainty during the 2007-2009 recession. Despite claims in the literature, the variation in this uncertainty measure matches the cross-sectional distribution of unemployment outcomes in this period. This relationship is robust to numerous controls for other determinants of labor market outcomes and produces a within-state pattern of effects across industries, occupations, and individuals that is consistent with standard "wait-and-see" models of firm behavior under uncertainty. Using preexisting state institutions that amplified uncertainty, we find evidence that this type of local uncertainty played a causal role in increasing unemployment. Together, these results suggest that increased uncertainty contributed to the severity of the Great Recession.
Subjects: 
unemployment
Great Recession
economics
JEL: 
A
Document Type: 
Working Paper

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