The Great Recession’s long-term damage

Laurence Ball 01 July 2014

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According to macroeconomics textbooks, a fall in aggregate demand causes a recession in which output drops below potential output – the normal level of production given the economy’s resources and technology. This effect is temporary, however. A recession is followed by a recovery period in which output returns to potential, and potential itself is not affected significantly by the recession.

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Topics:  Global crisis

Tags:  growth, unemployment, OECD, potential output, Great Recession, hysteresis

Can temporary in-work support help the long-term unemployed enter sustained work?

Richard Dorsett 21 November 2013

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There is growing awareness among policymakers that, in order to break the so-called ‘low pay, no pay’ cycle, labour market programmes must do more than just encourage job entry. To help the unemployed achieve long-term self-sufficiency, they must also support them in work. For a long-time, the UK and the US have provided in-work payments to low-paid workers via Working Tax Credit and Earned Income Tax Credit, respectively. These are available on an ongoing basis, and are intended to sharpen work incentives by increasing the rewards to employment.

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Topics:  Labour markets

Tags:  unemployment, incentives, low pay, tax credits, hysteresis