Working Paper: CEPR ID: DP17376
Authors: Mark Gertler; Christopher Huckfeldt; Antonella Trigari
Abstract: We revisit the role of temporary layoffs in the business cycle. While some have emphasized a stabilizing effect due to recall hiring, we quantify from the data an important countercyclical destabilizing effect due to “loss-of-recall”, whereby workers in temporary-layoff unemployment lose their job permanently. We develop a quantitative model allowing for endogenous flows of workers across employment and both temporary-layoff and jobless unemployment. The model captures both pre- and post-pandemic unemployment dynamics, including the recessionary role of loss-of-recall. We use our structural model to show that the Paycheck Protection program generated sizable employment gains, in part by significantly reducing loss-of-recall.
Keywords: temporary layoffs; recalls; lossofrecall; unemployment; business cycles
JEL Codes: No JEL codes provided
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| temporary layoffs (J63) | lossofrecall (Y60) |
| lossofrecall (Y60) | jobless unemployment (J64) |
| temporary layoffs (J63) | jobless unemployment (J64) |
| Paycheck Protection Program (H81) | lossofrecall (Y60) |
| lossofrecall (Y60) | unemployment dynamics (J64) |