Economic diversity is a drag when times are good but a lift when times are bad

Conventional wisdom contends that promoting and maintaining economic diversity is an important way in which economies can build resilience against external economic shocks such as recessions. In new research, Robert T. Greenbaum and Lathania Brown put this idea to the test, with a study of employment data from Ohio from 1977 to 2011. They find that while diversity does help buffer economies from national or local employment shocks, this can come at the cost of relatively higher levels of unemployment during times that are more prosperous.