Eva Sierminska (German Institute for Economic Research) and Yelena F. Takhtamanova (Federal Reserve Bank of San Francisco)
DIW Berlin (German Institute for Economic Research), Discussion Paper No. 1042
Some of the statistics coming out of the financial crisis that began in late 2007 are all too commonplace by now: More than a quarter of U.S. households’ net worth was obliterated, leading to an unemployment rate that soared to just over 10 percent in October 2009 — the highest since the 1982 recession. But the authors of this paper chose to dig below these numbers and answer some big questions: What were the main factors behind the rising unemployment rates? Which demographic groups were affected most?
Examining monthly surveys of households conducted by the U.S. Bureau of Labor Statistics, the authors compared unemployment data from the current recession with downturns stretching back to 1948. They found that the downturn was as hard on jobs as any other on record: Workers’ job-finding probability fell from 40 percent in July 2007 to an all-time low of 17 percent in December 2008. Further, the authors concluded that the increase in the unemployment rate was driven mostly by older workers being squeezed out by less well compensated younger employees.
But perhaps the most notable finding is that the financial downturn was a mancession, as the authors called it. In August 2009, the unemployment rate for men was 2.7 percentage points higher than that for women — the widest gender gap since 1948 — and two months later the male unemployment rate hit a record 11.4 percent. The authors cited previous studies that have shown that men are more likely to be employed in manufacturing and agricultural professions, which are prone to dramatic swings in the economy, whereas women tend to work in administrative, public-sector, and service-sector occupations, which are less influenced by business cycles. The study also noted that after a long period of closing the employment gap with Caucasian workers, African-Americans comparatively lost more jobs during the recession — again, with men feeling the worst pinch.
This study reports that males took the brunt of the job losses in the recession, which also hit older workers particularly hard.