Economic output in the US seems to have recovered since the Great Recession – but jobs have not. This ‘jobless recovery’ has led economists to argue that unemployment has reached a point where it can fall no further without further inflation. This column disagrees, suggesting the nature of the crisis affects the nature of the recovery.
Guillermo Calvo, Fabrizio Coricelli, Pablo Ottonello, 24 July 2012
Glenda Quintini, 15 May 2012
Recent sizeable increases in youth unemployment are compromising the school-to-work transition of recent school graduates. This column uses optimal matching, a method borrowed from molecular biology, to study the transitions from school to work in Europe and the US. It argues the share of youth facing serious difficulties on the labour market is 18 percentage points smaller in the US than in Europe. In Europe, 30% of youth face difficulties settling into the labour market and another 15% are trapped in long-term unemployment or inactivity.
Clemens Hetschko, Andreas Knabe, Ronnie Schöb, 04 May 2012
Most people’s wellbeing is permanently affected by unemployment. This column argues that the unhappiness is due to a loss of identity, rather than daily experiences. Using German data, it shows that the long-term unemployed become happier upon entering retirement, thus changing social category, even though this does not change their daily lives.
Alessandro Turrini, 25 April 2012
Most EU countries have embarked on a path of fiscal austerity. Would the employment impact of fiscal consolidation be more harmful if reforms liberalising the labour market were taken at the same time? This column argues that fiscal consolidations increase unemployment more in regulated labour markets because employment protection is associated with a stronger reduction in job creation.
Jan van Ours, Anne Gielen, 13 February 2012
Much research has documented that unemployment makes people unhappy. But does unhappiness spur the unemployed to look harder for jobs? And if so, why do governments need to help them find work with active labour market policies? CEPR DP8842 finds that the unhappiest of the unemployed do search harder for jobs, but don’t find them faster – suggesting that even the most motivated jobseekers could benefit from activation policies.
Samuel Bentolila, Juan Dolado, Juan Jimeno, 20 January 2012
Spain has a lower public debt-to-GDP ratio than not only Italy, but also France, Germany, and the UK. So why is it threatened with another downgrade? This column points to the fundamental problem with Spain’s economy – the insider-outsider divide that has led to the highest unemployment rate in the Eurozone. It proposes a single open-ended contract for all workers – a difficult solution whose time has come.
Michael Burda, Jennifer Hunt, 02 November 2011
Jobs and the lack of them are top of the agenda for policymakers and increasingly groups of protestors gathered in the financial districts of New York, London, and elsewhere. Unemployment in these countries is in danger of reaching 10%. In Germany, however, unemployment is below 7%. Some hail it as a miracle. This column finds a scientific – and far less inspiring – explanation.
Tommaso Monacelli, Vincenzo Quadrini, Antonella Trigari, 18 October 2011
Three years after the beginning of the Great Recession, the US unemployment rate remains at 9%, double its pre-crisis level. This column suggests the credit crunch may be behind this high number. It argues this is not because lower debt impairs the hiring ability of firms, but because it places firms in a less favourable bargaining position, allowing workers to negotiate higher wages, and thus reducing employment.
Roger Farmer, 18 August 2011
One explanation for the 2007-09 global crisis is that consumers, markets, and politicians were gripped by “irrational exuberance” that led them to believe the record-high house prices and stock prices were sustainable. This column proposes a new explanation based on rational behaviour and microeconomic theory. It argues that however high stock prices rise, there is always an equilibrium in which they can rise further.
Erik Hurst, Loukas Karabarbounis, Mark Aguiar, 17 August 2011
When jobs are scarce, what else is there to do? This column looks at data from the American Time Use Survey (ATUS) and finds that roughly 30% to 40% of time not spent working is put towards increased “home” production, 30% of time is allocated to increased sleep time and increased television watching, while other leisure activities make up a further 20% of the foregone market work hours.
Jennifer Smith, 18 July 2011
Labour-market policy can try to make it easier to get hired or harder to get fired. This column asks which of these approaches policymakers should prioritise. Focusing on the UK, it finds that while job-finding rates could be improved, policies aimed at reducing the amount of job losses during a recession play an equally important role despite being less in vogue.
Alfonso Rosolia, Federico Cingano, 17 July 2011
If you lose your job, can you find a new one with a little help from your friends? This column presents evidence that displaced Italian workers with more employable friends and social contacts are unemployed for a shorter period of time.
Marga Peeters, 02 June 2011
After the drama of Egypt’s revolution comes the economic reality – one of the catalysts for regime change was the country’s high unemployment. This column shows that the growing number of young people entering the job market will only add to the pressure. It argues that job creation in the private sector should be the number one priority for stimulating Egypt’s economic growth.
Pierella Paci, Ana Revenga, Bob Rijkers, 19 April 2011
When a crisis hits, how should policymakers move to save jobs? This column reviews the evidence from policy responses to recent crises, highlighting the importance of being prepared. It finds that countries with prudent fiscal management and sound policy infrastructure tend to suffer relatively smaller and shorter negative shocks than others.
Hermann Gartner, Christian Merkl, 09 March 2011
Policymakers the world over are staring at the strength of the German economy with envious eyes. This column argues that the root of Germany’s miracle lies in its “wage moderation” that was the result of labour-market policies in the years preceding the global crisis – a point that is often ignored in the public debate.
Nicolas Groshenny, 02 February 2011
Was monetary policy in the US too easy between 2002 and 2006? This column argues "no”. It shows that the large and persistent deviations from the Taylor rule over that period were indeed consistent with the pursuit of the Federal Reserve's dual mandate.
Pierre Cahuc, Stéphane Carcillo, 01 February 2011
One method for combating unemployment during the global crisis has been the use of short-time work schemes that allow employers to temporarily reduce hours worked while compensating workers for the induced loss of income. In the first of two columns on labour markets, the authors present new evidence establishing that these schemes do indeed reduce unemployment. But they are no panacea and are not without their own problems.
Gianmarco Ottaviano, Giovanni Peri, Greg Wright, 18 November 2010
Manufacturing production and employment in the US has been in decline over recent decades, often with the finger pointed at immigration and globalisation. This column presents evidence from the US between 2000 and 2007 to show that immigrant and native workers are more likely to compete against offshoring than against each other. Moreover, offshoring's productivity gains can spur greater demand for native workers.
Andreas Knabe, Ronnie Schöb, Joachim Weimann, 17 November 2010
“We were happy in those days… Because we were poor”, goes the old Monty Python sketch. This column suggests there might be some shred of truth in this joke. It finds that while unemployed people report being less satisfied with their life in general, their emotional wellbeing experienced during day-to-day activities does not seem to suffer at all.
Roger Farmer, 08 November 2010
CEPR Discussion Paper 8100 re-examines the ability of old-Keynesian and new-Keynesian models to cope with persistence of unemployment. The author argues the an import input of persistent unemployment is the "animal spirits" of the unemployed. He tests an old-Keynesian model in which the Phillips curve is replaced by a belief function and finds it a better fit for the data than new-Keynesian variants.