Why Are Some Industries More Cyclical Than Others?

This article is an empirical examination of why some industries are far more cyclical than others. Using highly disaggregated panel data, we examine which elements of technology and market structure appear to be most closely associated with differences in cyclicality across industries. We find that durable-goods industries are approximately three times more cyclical than nondurable-goods industries. Within durable-goods industries, the proportion of variable and quasi-fixed factor inputs, market concentration, and labor hoarding appear to be important determinants of cyclical behavior. In contrast, for nondurable-goods industries, we find little systematic relationship between cyclicality and market characteristics.