On the Sources and Consequences of the Great Seasonal Moderation

This project will analyze the sources and consequences of the declining seasonal fluctuations in the U.S. labor market. The first contribution of this project will be to document the magnitude of seasonal flows in the U.S. labor market and show how much they declined over time. The second contribution will be to identify the sources of these seasonal flows and account for why seasonal patterns in the U.S. labor market have moderated over the past four decades. The final contribution will be to show that these flows matter for long-run outcomes and trends in the labor market, such as the declines in the natural rate of unemployment and labor reallocation. The project will improve the understanding on the role of seasonal flows in labor markets, and will have potential implications for labor market policy.

The proposed research will construct time series of seasonal flows for the aggregate economy and for different demographic groups using unsupervised machine learning techniques. The research will use detailed longitudinal information on individuals’ labor market status. Identifying seasonal flows and documenting the decline in these flows will be useful to assess how these seasonal flows affect the labor market such as the natural rate of unemployment and business dynamism. Understanding the heterogeneity in incidence of seasonal labor market flows will help improve the labor market outcomes of those who make up these flows.