Sectoral Employment Shifts and Unemployment

This paper provides additional insight on the Lilien 1982 sectoral shift hypothesis (Lilien (1983), Abraham and Katz (1986), Samson (1986), Neelin (1987)) by applying it to Swedish data. Lilien claimed that part of the cyclical variation in unemployment is caused by structural shifts in sectoral employment demand. We find some evidence in favour of Lilien‘s notion. Greater sectoral shocks partly result in higher unemployment in Sweden. When extending the sectoral shift approach, controlling for labour market support, the evidence in favour of the sectoral shift hypothesis is weaker.