Article

March 2014

A cohort component analysis of the 2007–2009 recession

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The widest differences between actual and model-predicted changes in full-time employment were among younger workers. Full-time employment of workers ages 19 to 33 were between 16 and 26 percentage points less than what the cohort model predicted in 2010. The largest difference was for workers ages 19 to 23, who had a difference of 26 percentage points between their actual and modeled levels of employment, consisting of a 24 percent decline in actual employment and lost potential growth of 2 percent. Offsetting these declines were larger increases in part-time employment among younger workers than the model predicted. For example, part-time employment was 16 percentage points higher than the model predicted for workers ages 19 to 23 and 23 percentage points higher for workers ages 24 to 28, the largest difference for any age group. Though large, these gains in part-time employment for workers ages 19 to 33 were not enough to overcome the declines in full-time employment, which led to declines in total employment that were 11 to 13 percentage points larger than the model predicted.

Differences between actual and model-predicted changes in full-time employment were not as dramatic for older age groups as for younger age groups, although the directions of these changes were the same. For example, employment of full-time workers ages 34 to 64 years of age was between 8 and 12 percentage points less than the model predicted in 2010, compared with a range of 17 to 26 percentage points less for workers ages 19 to 33. However, the differences between actual and model-predicted changes in part-time employment show no discernable pattern based on age, with employment of all age groups higher than the model predicted in 2010 (see figure 4).

Occupational employment. Employment by occupation was analyzed for five occupational groups by comparing the actual employment change of 19 to 64 year olds and the employment change predicted by the cohort model (see table 3).

Table 3. Actual and model-estimated employment change by occupational group, 2007–2010
Occupational groupActual percent change, 2007–2010Model-estimated percent change,
2007–2010
Percentage point difference between actual and projected change
Management, business, science, and arts occupations-16-7
Service occupations45-1
Sales and office occupations-71-8
Natural resources, construction, and maintenance occupations-177-24
Production, transportation, and material moving occupations-110-11
Source: Current Population Survey and authors’ calculations.

Natural resources, construction, and maintenance occupations experienced the largest actual employment decline between 2007 and 2010 at 17 percent, which coincides with the collapse of the housing bubble during this time. The cohort model predicted that this occupational group would have the largest growth, 7 percent, which was also a consequence of the inflated growth produced by the housing bubble. The large increase predicted by the model and the large decline in actual employment caused this occupational group to have a 24-percentage-point difference between the actual and modeled employment change, the largest such change.

The 11-percent employment decline in production, transportation, and material moving occupations was the second largest decline in actual employment. Nearly half of this occupational group is employed in the manufacturing industry, which was hit particularly hard by the recession. The model predicted that employment would remain stable

Management, business, science, and arts occupations, as well as sales and office occupations, experienced differences between actual and modeled employment of 7 and 8 percentage points, respectively. This is similar to the 8-percentage-point difference experienced by the economy as a whole. However, for management, business, science, and arts occupations, the difference stemmed from lost potential growth as employment only declined by 1 percent, whereas sales and office occupations actually experienced a 7-percent decline and only lost 1 percentage point in potential growth.

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About the Author

Brian Roberts
roberts.brian@bls.gov

Brian Roberts is an economist in the Office of Occupational Statistics and Employment Projections, U.S. Bureau of Labor Statistics.

Dalton Terrell
terrell.dalton@bls.gov

Dalton Terrell is an economist in the Office of Occupational Statistics and Employment Projections, U.S. Bureau of Labor Statistics.