Category: Cycles, Employment, Think Tank

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3 Responses to “Cyclical Unemployment, Structural Unemployment”

  1. CSF says:

    Diamond suggests that those who embrace the “new normal” paradigm are willing to tolerate higher unemployment, and he cites the St Loius Fed’s 2010 Annual Report (footnote 6), which suggests that if unemployment is structural then fiscal/monetary stimulus is inappropriate.

    However, El-Erian has maintained throughout the Great Recession that monetary and fiscal stimulus are are necessary, though insufficient. Structural reforms are also needed, since deleveraging gums up the transmission mechanisms for normal stimulus.

  2. willid3 says:

    wondering if we only look at employment and ignore demand aren’t we ignoring what causes jobs to begin with? also if it were structural, wouldnt that be so nation wide instead of in geo graphical? and would it imply that all economic sectors have the same problem not just a few?

  3. Frwip says:

    Unrealistic employer expectations may be a good part of the problem. At least, that’s what Peter Cappelli (Wharton) thought a year ago.

    And, just like inflation expectations, employer expectations can take years of heavy pounding to change.

    http://www.nytimes.com/roomfordebate/2012/07/09/does-a-skills-gap-contribute-to-unemployment/if-theres-a-skills-gap-blame-it-on-the-employer

    1. Have you tried raising wages? If you could get what you want by paying more, the problem is just that you are cheap. The fact that I cannot find the car I want at the price I want to pay does not constitute a car shortage, yet a large number of employers claiming they face a skills shortage admit that the problem is getting candidates to accept their wage rates.