Federal Reserve Bank of Boston
Public Policy Brief
The impact of policy uncertainty on U. S. employment: industry evidence
The anemic pace of the recovery of the U. S. economy from the Great Recession has frequently been blamed on heightened uncertainty, much of which concerns the nation’s fiscal policy. Intuition suggests that increased policy uncertainty likely has different impacts on different industries, to the extent that industries differ in their exposure to government policies. This study utilizes industry data to explore whether policy uncertainty indeed affects the dynamics of employment, and particularly its impact on industry employment, during this recovery. This analysis focuses on heterogeneity across industries in terms of the fraction of their product demand that can ultimately be attributed to federal government expenditures. The estimation results reveal that policy uncertainty indeed retards employment growth more in industries that rely more heavily on federal government demand: the growth rate of employment in these industries appears to have been four-tenths of a percentage point lower during the quarters in recent years when policy uncertainty spiked.
Cite this item
J. Christina Wang, "The impact of policy uncertainty on U. S. employment: industry evidence"
, Federal Reserve Bank of Boston, Public Policy Brief, number 3, 2013.
- D57 - Microeconomics - - General Equilibrium and Disequilibrium - - - Input-Output Tables and Analysis
- D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
- E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
- E66 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General Outlook and Conditions
- G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
- L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
Keywords: uncertainty; fiscal policy; input-output tables; industry accounts; employment; hours
This item with handle RePEc:fip:fedbpb:00001
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