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Temporary Layoffs, Loss-of-Recall, and Cyclical Unemployment Dynamics

Mark Gertler et al.

The American Economic Review2026https://doi.org/10.1257/aer.20220749article
FT50AJG 4*ABDC A*
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0.50

Abstract

We revisit the role of temporary layoffs in the business cycle. While some have emphasized a stabilizing effect due to recall hiring, we quantify from the data an important countercyclical destabilizing effect due to “loss-of-recall,” whereby workers in temporary-layoff unemployment lose their job permanently. We develop a quantitative model allowing for endogenous flows of workers across employment and both temporary-layoff and jobless unemployment. The model captures both pre- and post-pandemic unemployment dynamics, including the contractionary role of loss-of-recall. We use our structural model to show that the Paycheck Protection Program generated sizable employment gains, in part by significantly reducing loss-of-recall. (JEL E24, E32, I12, J41, J63, J64)

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https://doi.org/https://doi.org/10.1257/aer.20220749

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@article{mark2026,
  title        = {{Temporary Layoffs, Loss-of-Recall, and Cyclical Unemployment Dynamics}},
  author       = {Mark Gertler et al.},
  journal      = {The American Economic Review},
  year         = {2026},
  doi          = {https://doi.org/https://doi.org/10.1257/aer.20220749},
}

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Temporary Layoffs, Loss-of-Recall, and Cyclical Unemployment Dynamics

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