The COVID-19 pandemic represents an unprecedented shock to labour markets. This column argues that the policy response should balance two objectives: (1) facilitating prompt reallocation of employment to essential activities during the emergency, and (2) maintaining workers’ attachment to their previous employers, preserving the aggregate stock of firm-specific human capital, and avoiding persistent mismatch, which would propagate the temporary shock into a prolonged stagnation. The authors make concrete labour market policy proposals and compare them with measures currently being implemented on both sides of the Atlantic.
Shigeru Fujita, Giuseppe Moscarini, Fabien Postel-Vinay, 30 March 2020
Hie Joo Ahn, James Hamilton, 10 October 2016
Understanding why the long-term unemployed have so much more trouble finding work is fundamental for characterising what happens during recessions. This column argues that rather than a change in the probability of any given unemployed individual finding a job, it was a change in the composition of people newly flowing into unemployment – which can arise for example from mismatch between idiosyncratic worker characteristics and available jobs – that was the key reason unemployment went so high and took so long to come down during the Great Recession.