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Economic volatility and its effect on workforce September 12, 2006

Posted by Tom in Research, Workforce.

Another great tip from Kevin Thompson at the Employment & Training Administration:

Economic Turbulence: Is a Volatile Economy Good for America?

WASHINGTON, Sept. 12 — National economies are naturally turbulent — and the United States is no exception. On any given day, companies come and go and jobs are lost and created. But that volatility may not necessarily be a bad thing, according to three leading labor economists. Julia Lane, Clair Brown and John Haltiwanger — with support from the Alfred P. Sloan Foundation — have concluded a four-year research project designed to study the effect of economic turbulence on American jobs.

Their work is derived from the U.S. Census Bureau‘s Longitudinal Employer- Household Dynamics (LEHD) program encompassing data from five diverse sectors of the American economy — financial services, retail food services, trucking, semiconductors and software — analyzed by leading university-based researchers from Sloan Industry Centers.

“This is a novel data infrastructure that has created fresh information about what happens to workers and firms together with new measures of workforce quality,” said Julia Lane, senior vice president and director of the Economics, Labor, and Population Studies Department at the National Opinion Research Center, affiliated with the University of Chicago. “This rich source of information has been complemented by the Alfred P. Sloan Foundation’s $70 million investment in the Sloan Industry Centers, in which researchers have developed deep contextual knowledge on firm turbulence and heterogeneity, human capital measures and the sources of wage inequality and economic growth.”

The research is contained in the new book, Economic Turbulence: Is a Volatile Economy Good for America?, published by the University of Chicago Press. The book’s authors discuss a variety of factors that play a role in the chaotic changes that lead firms to grow and shrink and workers to change jobs. This turbulence can at times strengthen the U.S. economy by requiring it to be more flexible.

The bottom line is that newspaper anecdotes about lost jobs and disappearing career ladders typically fail to recognize that there are both winners and losers from economic turbulence. The book provides fact-based evidence about the real impact of economic change on workers and the firms that employ them.

For more information, please visit http://www.economicturbulence.com.

More on the volume …

Turbulent change is the hallmark of the U.S. economy, and one of the reasons for its success. Every week, in every part of the economy, and in every corner of the country, some firms are shutting down and others are starting up, some jobs are being created and others are being destroyed, some workers are being hired and others are quitting or being laid off.

The analysis in this book combines facts gleaned from studying millions of data points on millions on firms and workers, as well as from interviews with firms in each industry to answer some key questions about the relationship between economic turbulence and:

  1. Firm performance and survival: What is the relationship between workforce quality, turnover, and firm survival?
  2. Worker career paths: What impact do firms have on workers’ career paths? What is the long run impact of firm stability and instability on a worker’s earnings growth?
  3. Wage distribution: What has happened to worker earnings over time? What has happened to middle, low, and high income jobs? Do new firms pay more or less than old?

This is achieved by describing what has happened in five industries that are familiar to all Americans: semiconductors, software, financial services, retail food, and trucking. These industries have been studied in depth by researchers at the respective Sloan Industry Centers.

Chapter 2 defines economic turbulence and describes the data, concepts, and methods used in this book.

Chapter 3 provides background on the five Sloan industries, which including financial services, retail food, semiconductors, software, and trucking.

Chapter 4 is a detailed discussion of firm performance and its relationship with workforce quality and turnover.

Chapters 5 and 6 look at the other side of the labor market, focusing attention on workers’ job ladders and career paths, respectively.

Chapter 7 looks at the impact of turbulence on the earnings distribution, and in particular on the fortunes of middle-class workers.



1. Dean Blobaum - September 12, 2006

An overview of the book, Economic Turbulence: Is a Volatile Economy Good for America? by Clair Brown, John Haltiwanger, and Julia Lane–it’s actually the whole of the introductory chapter–is available on the University of Chicago Press website: http://www.press.uchicago.edu/Misc/Chicago/076326.html

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