Upjohn Institute researchers will estimate the extent to which recessions have a persistent effect on per capita income in the most severely affected local areas. If persistent effects are identified, the project will explore which indicators will best identify the local areas that suffer from persistently lower per capita income. Prolonged local distress may rationalize federal policy to assist residents in the identified regions, either individually or regionally. Any such federal policy needs reliable indicators of which regions are most likely to suffer persistent economic distress. Empirical work will be done in two stages: 1) estimate the persistent effects on the long-run local area per capita income of sharper downturns in per capita income due to the recession; and 2) identify which local areas that are hit hard by a recession are most likely to have trouble bouncing back. Data used to estimate stage one will come from BEA's Regional Economic Information Service and the Outgoing Rotation Group of the U.S. Current Population Survey.