EMPLOYMENT FLUCTUATIONS IN US REGIONS AND INDUSTRIES - THE ROLES OF NATIONAL, REGION-SPECIFIC, AND INDUSTRY-SPECIFIC SHOCKS

This study quantifies the roles of national, region-specific, and indu stry-specific shocks in aggregate employment fluctuations in U.S. regi ons and industries. Variation among the growth rates of major regions and industries is decomposed into unobserved national, region-, and in dustry-specific components. The results reject the view that any heter ogeneity in regional fluctuations is attributable to differences in in dustry composition. After controlling for industry mix effects, roughl y 40% of the variance of the cyclical innovation in any region's growt h rate is particular to that region. In addition, region-specific shoc ks appear to propagate across regions over time.