The Evolution of Local Labor Markets after Recessions

This paper studies how US local labor markets respond to employment losses that occur during recessions. Following recessions from 1973 through 2009 , we find areas that lose more jobs during the recession experience persistent relative declines in employment and population. Most importantly , these local labor markets also experience persistent decreases in the employment -population ratio , earnings per capita , and earnings per worker. Our results imply that limited population responses result in longer -lasting consequences for local labor markets than previously thought and that recessions are followed by persistent reallocation of employment across space.