AAEA Virtual Presentation 2022

Abstract

This study examines the dynamic effects of national, regional, and local labor market shocks on labor force participation rates (LFPR) in Appalachia. We use a dynamic factor model with time-varying loading parameters and stochastic volatility to explore the synchronicity and divergence between state LFPRs within this region. We find that the national and state-specific factors are the dominant contributors to these observed variations over time. Our findings can help better target labor policy by taking advantage of the sensitivity exhibited by each state to various labor market conditions.