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THE GREAT RECESSION: A STATISTICAL ANALYSIS OF ITS

EFFECTS ON UNEMPLOYMENT
Miranda M. Zhang
Stephanie Peppas
Spero Peppas
Tyler T. Yu
Georgia Gwinnett College
ABSTRACT
Although the Great Recession is over, its impact is far from being fully estimated, and
there are important economic lessons still to be learned. As a major casualty of the Great
Recession, employment suffered, with unemployment soaring into the double digits and lingering
at an unacceptably high level for several years. This study examines if the Great Recession in the
US affected the Northeast, the South, the Midwest and the West equally. This study also,
determines the correlation between education and unemployment and tests the differences in
unemployment among different levels of education. In addition, this study examines potential
differences in rates of unemployment between males and females and if there is a difference in
unemployment among four racial/ethnic groups.
The findings of this study revealed the following: (1) Unemployment rates, during and
after the Great Recession, reached and remained at high levels for certain states, with rates
soaring into the double digits. (2) The unemployment rate varied with the level of education. The
higher the level of education, the lower the unemployment rate. (3) The unemployment rate of
male workers was consistently higher than that of female workers. (4) African Americans and
Hispanics overall had much higher unemployment rates than did Whites and Asians.
Keywords: Great recession, unemployment, regional, education, male-female, racial, ethnic

INTRODUCTION
One of the most significant features of the 2007 to 2009 economic recession was the high
and, to a certain degree, long lasting effect of unemployment in the labor market. This recession,
known as the Great Recession, which officially started in December 2007 and ended in June
2009, brought the unemployment rate to its highest level since 1983 (USDL). Though the Great
Recession is over, its impact is far from being fully understood, and there are important
economic lessons yet to be learned. Employment suffered with unemployment reaching the
double digits and lingering at an unacceptably high level for several years. Characteristics
unique to this recession also emerged, e.g., male workers seemed more likely to lose their jobs
than female counterparts (Mark J. Perry's, Oct 17, 2009)..
Today, the high unemployment rate at the national level in the US varies across different
regions. At the same time, the countrys racial and ethnic composition is rapidly changing, with
the number of Hispanics surpassing the number of African Americans. It is now more important
than ever to understand how national unemployment affects men versus women, regions of the
country, as well as racial and ethnic groups.
This study examines if the Great Recession in the US affected different parts of the
economy equally. The country was divided into four parts: the Northeast, the South, the Midwest
and the West. This study also determines the correlation between education and unemployment
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and tests the differences in unemployment among different levels of education. In addition, this
study examines potential differences in rates of unemployment between males and females.
Finally, the study examines potential difference in unemployment among four racial/ethnic
groups.
LITERATURE REVIEW
Regional distribution of unemployment has attracted both empirical and theoretical
research. Lopez-Bazo and Motellon examined the regional disparities in unemployment in Spain
(Lopez-Bazo & Motellon, 2012) and concluded that unemployment was distributed across
regions unevenly. Many factors may have contributed to the regional heterogeneity in
unemployment, with education being a likely cause for the differences across regions in Spain. A
question then that begs to be answered is: Is there heterogeneity of regional impact of
unemployment of the Great Recession in the United States?
Freeman conducted a study to examine the unemployment rates across different regions
of the United States using a differential of race and ethnicity. The author contended that the
U.S. economy is characterized by persistent differentials in unemployment rates by race and
Hispanic origin. The study tests for persistence of unemployment rates and unemployment
ratios by race and ethnicity (white, black and Hispanic origin) by region and across both
categories. Among other findings, the study showed evidence that minority/white unemployment
ratios were stationary and pro-cyclical, especially for the Black/White ratio. Pro-cyclicality may
be caused by, at least partially, the relatively larger percent changes in White unemployment
during recessions and a relatively smaller base of unemployed for Whites (Freeman, 2012). So,
is this gap closing after economic recession or remaining the same?
Researchers worldwide have examined the phenomenon of unemployment in general and
during the Great Recession in particular. Obviously, the challenge of high unemployment rates
was not unique to the US. An example of these studies is a recent publication Unemployment
Dynamics in the OECD (Elsby, Hobijin, & ahin, 2013). The authors used a new method to
contrast the average flow hazard rates between Anglo-Saxon, Nordic, and continental European
countries. The empirical findings suggest that unemployment in the EU deviates considerably
from its steady-state level. For all 14 countries included in the study, changes in inflows into
unemployment lead changes in the unemployment rate, and changes in outflows tend to lag
unemployment variation.
Unemployment compensation during the Great Recession has also been a focus of
research. Nicholson, Needels, and Hock provided a summary of literature on the legislation and
research related to the issue, focusing mainly on the United States, with a brief examination of
the European literature (Nicholson, Needels, & Hock, 2014). The study concluded that the poor
labor market performance during the Great Recession helped initiate the impetus for changes to
the unemployment compensation system now seen in the United States. One of the most
significant changes was the unprecedented duration of unemployment benefits, which could last
as long as 99 weeks.
During the Great Recession, men had a higher unemployment rate than women.
According to Professor Mark J. Perry's Blog (http://mjperry.blogspot.com, Oct 17, 2009) for
Economics and Finance, from December 2007 through December 2008, i.e., the first 13 months
of the Great Recession, the job loss rate for male workers was 84% of the total, while females

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only saw a job loss rate of about 16%. That is, the ratio of job loss was 5.25 for men for every
one job lost for women in other words, a real mancession.

Even during the subsequent years of recovery, the male unemployment rate was higher
than that of females. In the period from 2009 to 2012, the average unemployment rate was 9.35%
for men and 8.32% for women. Undoubtedly, the phenomenon of weaker labor market
performance of male workers was not unique to the US. The mancession was also observed in
other developed countries, such as the countries of the Organization for Economic Cooperation
and Development (OECD). This phenomenon is thus tagged as mancession in the US and in
OECD countries (OECD Observer, 2010). Bakas and Papapertrou conducted a study to examine
unemployment by gender using evidence from EU countries (Bakas & Papapertrou, 2014).
Applying panel unit tests for a sample of 15 countries, the authors contend that the empirical
findings confirmed persistence in the gender unemployment rates and the gender unemployment
gap. Peterson also looks at the issue of mancession from a feministic-institutional economics
perspective (Peterson, 2012). The question is: how significant is the difference between male
unemployment and female unemployment during and after the Great Recession?
Eisner noted in her research that during the Great Recession, seven million jobs were lost.
She examined the hardships college graduates would be likely to face in the upcoming job
market. The author contends that the heightened competition of skilled unemployed workers and
global labor practices by major corporations will increase stress on new graduates. The study
estimated that 1.5 million US undergraduates received bachelors degrees in 2009 and a
staggering 1.9 million US workers holding bachelors degrees were unemployed for that same
year. She summarized 2009 unemployment statistics as follows: 15.9 million unemployed
workers searching for full-time work; 9.2 million workers working part-time but looking for fulltime work; and 2.5 million out of work but not counted (Eisner, 2010).
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International Journal of Business and Economics Perspectives Volume 10, Number 1, Fall 2015

Morris et al. also studied the unemployment rates during the Great Recession and found
that the unemployment rate for men in these years was generally higher than that of women.
Their study considered factors such as gender, age, and education among different races. The
findings suggest that unemployment for women was less volatile than that for men. In addition,
educational attainment among the gender and racial groups had negative correlation with
unemployment: other things being equal, the higher the level of educational attainment, the
lower the unemployment rates would be (Morris et al., 2010).
Although an extensive body of research and literature exists on US unemployment in
general, e.g., causes, types, benefits and durations, the relevance of this research to the Great
Recession is still in its infancy. The empirical data on the statistical significance of the
hypothetical differences among different regions and between men and women in the labor force
demonstrate that the association with the level of education and the distribution among race and
ethnicities, are uncertain at best.
RESEARCH QUESTIONS AND STATED HYPOTHESES
Based on the literature review, the following questions and related hypotheses have been
developed:
Unemployment: Are There Regional Differences?
Ho: There is no difference in unemployment among the four regions.
H1: There are differences in unemployment among the four regions.
Unemployment: Does Level of Education Matter?
Ho: There is no relationship between the level of education and the unemployment rate.
H1: There is a relationship between the level of education and the unemployment rate.
Mancession: Myth or Reality?
Ho: There is no difference in rate of unemployment between males and females.
H1: There is a difference in rate of unemployment between males and females.
Unemployment: Did It Affect Racial and Ethnic Groups Equally?
Ho: There is no difference in unemployment among the four racial/ethnic groups.
H1: There are differences in unemployment among the four racial/ethnic groups.
METHODOLOGY
Data Collection and Analytical Procedure
Using secondary data obtained from public sourcesprimarily from the U.S. Department
of Laborregional differences will be identified through the use of Analysis of Variance
(ANOVA) followed by Tukeys post hoc. To test the hypothesis that the last recession was a
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mancession, the t-test will be performed to determine if the difference between male and
female unemployment rates is statistically significant. So as to evaluate the effects of education
on unemployment, unemployment rates at various educational levels will be examined based on
the most recent evidence obtained during and immediately after the Great Recession. This will
be accomplished by utilizing the ANOVA technique. Last but not least, unemployment rates
associated with race/ethnicities will be analyzed using ANOVA to determine the statistical
significance of the differences among racial and ethnic groups.
STATISTICAL ANALYSES
Unemployment: Are There Regional Differences?
The first statistical analysis sought to determine if the Great Recession affected different
parts of the economy equally. The country was divided into four parts: the Northeast, the South,
the Midwest and the West. Data were collected for the four regions for 2009, 2011, and 2013.
While there was no strong evidence that the statistical distribution was abnormal, both Analysis
of Variance (ANOVA) and its non-parametric alternative Kruskal-Wallis tests (KW-Test) were
performed to determine the significance statistically. The Hypotheses for this model are stated
below:
Ho: There is no difference in unemployment among the four regions.
H1: There is difference in unemployment among the four regions.
H0: 1= 2 = 3= (means are equal)
H1: means are not equal
Where
1= Northeast; 2= South ; 3= Midwest; 4= West
As indicated by Table 1 for the differences between regional unemployment, both
ANOVA and KW Tests failed to reject the null hypothesis (Ho). Thus, no significant differences
were found among the four regions in terms of regional unemployment for 2009, 2011 and 2013.
The results of the statistical analysis seem to suggest that the Great Recession affected the four
regions equally. The severity of unemployment during and after the Great recession was
similarly distributed among all parts of the economy.
Unemployment: Does Level of Education Matter?
As the review of the literature showed a negative correlation between education and
unemployment, the authors wished to test the differences in unemployment among educational
groups. We conducted hypothesis testing on the potential differences among different levels of
education in terms of unemployment. For that purpose, four levels of education were used to test
the hypothesis: less than high school, high school diploma, some college or associate degree, and
college degree or higher. While there was no strong evidence that the statistical distribution was
abnormal, both Analysis of Variance (ANOVA) and its non-parametric alternative KruskalWallis tests (KW-Test) were performed to determine the significance statistically. The
unemployment rates in 2010, 2011 and 2012 were used to test the hypothesis, which are stated
below:
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Ho: There is no difference between the level of education and the unemployment rate.
H1: There is difference between the level of education and the unemployment rate.
H0: 1= 2 = 3= 4 (means are equal)
H1: means are not equal
Where
1=
2=
3=
4=

Less Than High School


High School Diploma South
Some College/Associates Degree
Bachelor's Degree or Better

Table 1
Statistical Result: Differences between Regional Unemployment Rates
One-Way ANOVA ( = 0.05) and KW Tests
Is the Difference between Unemployment Rates Statistically Significant?

Region

2009
2011
2013

Northeast

Northeast

10

8.9
7.7
7.2

N/A

South

16

9.6
7.8
7.4

Midwest

South

Midwest

West

Insignificant

Insignificant

Insignificant

Insignificant

N/A

Insignificant

Insignificant

14

8.1
6.6
6.3

Insignificant

Insignificant

N/A

Insignificant

West

10

9.2
7.4
6.7

Insignificant

Insignificant

Insignificant

Nation

50

8.9
7.4
6.7

N/A

N/A

N/A

N/A

N/A

Unemployment: Does Level of Education Matter?


As the review of the literature showed a negative correlation between education and
unemployment, the authors wished to test the differences in unemployment among educational
groups. We conducted hypothesis testing on the potential differences among different levels of
education in terms of unemployment. For that purpose, four levels of education were used to test
the hypothesis: less than high school, high school diploma, some college or associate degree, and
college degree or higher. While there was no strong evidence that the statistical distribution was
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49

abnormal, both Analysis of Variance (ANOVA) and its non-parametric alternative KruskalWallis tests (KW-Test) were performed to determine the significance statistically. The
unemployment rates in 2010, 2011 and 2012 were used to test the hypothesis, which are stated
below:
Ho: There is no difference between the level of education and the unemployment rate.
H1: There is difference between the level of education and the unemployment rate.
H0: 1= 2 = 3= 4 (means are equal)
H1: means are not equal
Where
1= Less Than High School; 2= High School Diploma South;
3= Some College/Associates Degree; 4= Bachelor's Degree or
Better

The statistical result is shown in Table 2 about the differences between the level of
education and unemployment. The unemployment rates for the four levels of education were
13.76, 9.34, 7.82, and 4.35 for less than high school, high school diploma, some college or
associate degree, and college degree or higher, respectively. By using Tukeys test, the
differences between the pairs of the treatments were found to be statistically significant.
Table 2
Statistical Result: Unemployment Differences between Educational Levels:
One-way ANOVA (= 0.05) and KW Tests
Educational
Levels

2010 2012

Less than
High School

Less than
High School

Some College
or Associate

Bachelors Agree
or Better

Less than High


School

13.76

N/A

Significant

Significant

Significant

High School
Diploma

9.34

Significant

N/A

Significant

Significant

Some College or
Associate

7.82

Significant

Significant

N/A

Significant

Bachelors
Agree or Better

4.35

Significant

Significant

Significant

N/A

This result, once again, confirms the hypothesis and reinforces the conclusions that the
level of education and unemployment maintain a negative association, as indicated by the results
of both ANOVA and the KW-Test. Going to school and staying until graduation is negatively
associated with unemployment.

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Mancession: Myth or Reality?


One of the unique features of the Great Recession was that male workers had a higher
unemployment rate than their female counterparts. The three-year (2010, 2011, and 2012)
average rate of unemployment in the United States was 9.35% for male workers and 8.32% for
female workers. As discussed, the phenomenon has been dubbed in literature as mancession or
hecession. By using the t-test, the unemployment rate between males and females was
confirmed as significantly different. The Hypotheses are stated below
The Hypotheses for this model are stated below:
Ho: There is no difference in rate of unemployment between Male and Female.
H1: There is a difference in rate of unemployment between Male and Female.
H0: 1= 2 (means are equal)
H1: means are not equal
Where
1= Male unemployment rate;
2= Female unemployment rate
Table 3
Statistical Result: Significance of Unemployment Rates Difference between Male
and Female Workers: t-test

Gender

Nominal Unemployment
Rate (%)

Female

8.32

Male

9.36

Which One
Did Better?

Is the Difference
Statistically Significant?

Female

Yes
t = 5.870
p = 0.000

As depicted by Table 3, the statistical difference between the male unemployment rate
and female unemployment rate was significant. The reason(s) that female workers fared better
than male workers during the Great Recession may warrant research itself. One authors
speculation is that female workers were harvesting the crops of higher educational performance:
in American colleges and universities, female students outnumbered male students, female
graduation rates were higher than that of male students, and, female students surpassed male
students in professional and/or graduate schools.
Unemployment: Did It Affect Racial and Ethnic Groups Equally?
Traditionally, unemployment rates in the United States have been unevenly distributed
across racial and ethnic groups. This was also true during the Great Recession and its recovery
period. In 2012, three years after the Great Recession was officially over, the average
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unemployment rates for African Americans, Hispanics, White, and Asians were 12.3%, 9.34%,
5.88%, and 4.86%, respectively. Using the cross-sectional data for the 50 states in the US, the
significance of the differences among unemployment rates for the four racial/ethnic groups was
tested. The test statistics in this case were again ANOVA and the KW-Test. The Hypotheses for
this model are stated below:
Ho: There is no difference in unemployment among the four racial/ethnic groups.
H1: There is difference in unemployment among the four racial/ethnic groups.
H0: 1= 2 = 3= 4 (means are equal)
H1: means are not equal
Where
1=
2=
3=
4=

White;
Black;
Hispanic;
Asian

Differences in unemployment among the four racial/ethnic groups (White, African


American, Hispanic, and Asian) were statistically significant both by ANOVA and by the KWtest. Tukeys tests revealed that while no difference existed between Whites and Asians,
significant differences existed among the other groups.
Table 4
Significance of the Differences of Unemployment Rates between Racial Groups:
One-way ANOVA (= 0.05) and KW Tests
Race and
Ethnicity

Mean

African
American

Hispanic

White

Asian

African
American

12.3%,

N/A

Significant

Significant

Significant

Hispanic

9.34%,

Significant

N/A

Significant

Significant

White

5.88%,

Significant

Significant

N/A

Insignificant

Asian

4.86%

Significant

Significant

Insignificant

N/A

As indicated by Table 4, the differences in unemployment rates between African


Americans and Hispanics, and Whites and Asians, were statistically significant. The same holds
true for Hispanic unemployment rates, which were significantly different from that of African
Americans, Whites and Asians. The unemployment rate for Whites was significantly lower than
that for African Americans and Hispanics. However, the unemployment rate for Whites, 5.88%,
was different from that for Asians, 4.86%, though the difference was not statistically significant.

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CONCLUSIONS
The empirical results of this study provide important insight into the state of
unemployment in the United States during and after the Great Recession. The first contribution
of this study is that the Great Recession hit hard on the United States economy. The findings of
this study show that during and after the Great Recession, unemployment rates reached and
remained at high levels for certain states, with rates soaring into the double digits. In terms of the
distribution of severity, the differences were statistically insignificant among the four regions in
the study, i.e., the Northeast, the South, the Midwest and the West.
The study confirmed the hypotheses that, other things being equal, the higher the level of
education, the lower the unemployment rate. The differences for the four levels selected for this
study, i.e., people with no high school diploma, with high school diploma, with some college or
associate degree, and with college degree or higher, were statistically significant.
A unique feature of unemployment in the Great Recession is the phenomenon that male
workers fared worse than their female counterparts. The unemployment rate for male workers
was consistently higher than that of female workers. The difference between the two was
statistically significant based on t-test results.
While more studies are needed in the future, the preliminary speculation may be that this
is the result of, at least partially, female workers overall preparedness for the labor force.
Female workers were better prepared than their male counterparts in the following aspects:
female students generally had higher GPAs, higher college attendance, stayed in school longer
(both at the undergraduate and graduate levels), and had better social and communication skills.
Once again, this study found that the unemployment rates, during and after the Great
Recession, were not color blind. African Americans and Hispanics overall had much higher
unemployment rates than did Whites and Asians. The differences among the groups were
statistically significant except for the difference between White unemployment rates and Asian
unemployment rates. While this issue is certainly multi-faceted and requires a comprehensive
approach to resolve, increased public awareness will help in terms of resource allocation.
Hopefully the results of this study will help contribute to the ongoing debate on public choice
decisions.
REFERENCES
Bakas, Dimitrios, & Evangelia Papapertrou. (2014). Unemployment by Gender: Evidence from
EU Countires, International Advances in Economic Research, 20,103-111.
Eisner, S. (2010). Grave new world? Workplace skills for today's college graduates. American
Journal of Business Education, 3(9), 27-50.
Elsby, Michael W.L., Hobijin, Bart, and Ayegl ahin (2013). Unemployment Dynamics in the
OECD. The Review of Economics and Statistics, 95 (2), 530-548.
Freeman, D. G. (2012). On (not) closing the gaps: The evolution of national and regional
unemployment rates by race and ethnicity. Review of Black Political Economy, 39(2),
267-284.

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L pez-bazo, Enrique and Elisabet Motell n (2012). The Regional Distribution of


Unemployment: What Do Micro-data Tell Us? Papers in Regional Science, Volume 92,
Number 2.
Mark J. Perry's Blog (http://mjperry.blogspot.com, (Oct 17, 2009) for Economics and Finance
Morris, P. D., Machuca, A., Jaeckel, S., & Wallace, L. A. (2010). Gender Bias In Labor Market
Outcomes: U.S. Unemployment Rates Of Men And Women By Educational Attainment
Levels and Racial Classifications. Insights to A Changing World Journal, (4), 76-96.
Nicholson, Walter, Needels, Karen, & Heinrich Hock. (2014). Unemployment Compensation
during the Great Recession: Theory and Evidence. National Tax Journal, 67 (1), 187218.
Peterson, Janice. (2012). The Great Crisis and the significance of Gender in the U.S. Economy.
Journal of Economic Issues, XLV I ( 2).
USDL, United States Department of Labor, Bureau of Labor Statistics. Databases, Tables &
Calculators by Subject. Retrieved from http://www.bls.gov/data/
OECD Observer, No 278, March 2010
About the Authors:
Miranda M. Zhang is a Professor of Finance and Economics and Coordinator of Business Science in the School of
Business, Georgia Gwinnett College. Dr. Zhangs research interests include international finance and economics,
corporate finance, small business financing, financial investment, financial market and financial derivatives.
Stephanie Peppas is an Instructor of Business Quantitative Analysis in the School of Business, Georgia Gwinnett
College. Her research interests focus on statistical analysis of national and international economics and empirical
research in business operations.
Spero Peppas is a Professor of Marking and International Business in the School of Business, Georgia Gwinnett
College. Dr. Peppas has been conducting research in the area of global business, global marketing, and the economic
impact of international and domestic political policies.
Tyler T. Yu is a Professor of Economics in the School of Business, Georgia Gwinnett College. His research
interests are in economic analysis and international business analysis.

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International Journal of Business and Economics Perspectives Volume 10, Number 1, Fall 2015

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