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Tuesday, May 13, 2014

'Labor Market Seems Dented, Not Broken'

Justin Wolfers:

Labor Market Seems Dented, Not Broken, by Justin Wolfers: There are two schools of thought about the longer-term prospects for the labor market. The darker view is that the Great Recession wrought permanent damage: The jobs that disappeared aren’t easily replaced, and the skills of the jobless are a poor match for the jobs that remain. ...
The sunnier view is that this is not a permanent shift, but rather the natural course of a recession... It’s a sunnier view because it suggests that a continuing recovery will largely solve our unemployment problem..., leaving no lasting mark.
The past two years have been kind to this more optimistic interpretation. ... It is surely too early to draw strong conclusions, but continued movements in this direction would suggest that the Great Recession hasn’t done lasting damage, and that it’s possible for the unemployment rate to head back toward 5 percent without the emergence of hiring bottlenecks.

It seems clear to me that there has been permanent damage, but we shall see...

    Posted by on Tuesday, May 13, 2014 at 09:45 AM in Economics, Unemployment | Permalink  Comments (60)


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