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DID REGIONAL ECONOMIC DIVERSITY INFLUENCE THE EFFECTS OF THE GREAT RECESSION?
Author(s) -
Deller Steven,
Watson Philip
Publication year - 2016
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/ecin.12323
Subject(s) - economics , heteroscedasticity , diversity (politics) , spillover effect , recession , wage , econometrics , stability (learning theory) , great recession , estimator , demographic economics , labour economics , statistics , macroeconomics , mathematics , machine learning , sociology , anthropology , computer science
Using data for U.S. counties from 2005 to 2012, we test whether higher levels of economic diversity mediated the effects of the Great Recession via four measures of stability. Spatial spillover effects are modeled by the use of the spatial Durbin estimator with heteroscedastic errors. The data generally support the central hypothesis that higher levels of diversity within a county are associated with enhanced employment stability across all counties as well as subsets of metro and nonmetro counties. Results for wage stability, however, appear to contradict our other findings. We suggest that underlying labor elasticities can bridge these apparent contradictory results. ( JEL R11, R12, O47)