Sectoral shifts : sources and effects on aggregate unemployment and output in the United States



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This dissertation examines the hypothesis that the dispersion of both employment and output growth rates across economic sectors may significantly affect aggregate output and the unemployment rate. To test this hypothesis, a multi-sectoral model was developed and estimated using U.S. quarterly data for ten major economic sectors in the period 1956-86. Three main causes of sectoral shifts in the post-war U.S. economy were considered: a monetary policy shock, the change in relative oil prices, and the growing foreign competition. The empirical results suggest that the cross-sectoral variances of both employment and output could adversely affect the overall unemployment rate. The cross- sectoral output variance is also negatively related to the aggregate output. The evidence also showed that while the cross-sectional variances associated with changes in oil prices and to a lesser extent in the foreign competition variable could importantly affect aggregate output and the unemployment rate, the variance due to money-stock changes has a virtually insignificant allocative effect.



Unemployment, United States, Mathematical models