Supersedes Working Paper 02-14

The authors analyze aspects of this decline using data covering postwar industry employment by state. Estimates from a pooled cross-section/time-series model indicate that fluctuations in macroeconomic and state-specific variables have both played an important role in explaining volatility trends. However, macroeconomic shocks account for more of the postwar fluctuations in state employment growth volatility than do state-specific forces.