Many commentators have noted that the US has ridden out its post-crisis malaise rather skilfully, not least when it comes to reducing unemployment. This column argues that the US unemployment rate - despite being impressive, all things considered - still has substantial room to fall because desire to work among the non-employed is close to a record low.
Régis Barnichon, Thursday, November 12, 2015 - 00:00
Athanasios Orphanides, Wednesday, November 11, 2015 - 00:00
There is generally consensus among macroeconomists that monetary policy works best when it is systematic. Following the financial crisis, the US Federal Reserve shifted from long-term, systematic policy to short-term goals targeting unemployment. This column argues that, while these were appropriate in the aftermath of the downturn, such policy accommodations have been pursued for too long since. The need for a somewhat accommodative policy cannot be used to defend the current non-systematic policy and excessive emphasis on short-term employment gains.
Thomas Philippon, Monday, August 31, 2015 - 00:00
The Eurozone crisis continues to take centre stage. This column discusses how deep the EZ crisis is, how long it will last, and what should be the policy priorities. A number of findings emerge. First, the difference in labour market performance between the US and the Eurozone is one of degree but not of kind. Second, the economic consequences of the sovereign debt crisis will be mostly gone by 2018, but the political crisis will continue. Third, enforcing fiscal rules via political arm twisting is a recipe for disaster. Market discipline must instead be brought back, but without financial fragmentation. Limited and conditional Eurobonds are the best way to do so.
Steffen Altmann, Armin Falk , Simon Jäger, Florian Zimmermann, Monday, August 3, 2015 - 00:00
A key question for policymakers is how long-term unemployment can be effectively reduced. This column presents new evidence from a large-scale field experiment in which job seekers were provided with information and encouragement. The results indicate that targeted information provision can be an effective policy tool, in particular in the combat against long-term unemployment.
Stefan Gerlach, Reamonn Lydon, Rebecca Stuart, Tuesday, July 21, 2015 - 00:00
Despite being a mainstay of macroeconomic theory for the past half century, the Phillips curve often receives the death knell from various commentators. These critiques often rely on results from data samples spanning relatively short periods. Using the case of Ireland, this column argues that short-term idiosyncrasies can explain the failure of the model in these contexts. Taking a longer historical view, the Phillips curve remains a useful macroeconomic model, at least in the Irish context.
Arash Nekoei, Andrea Weber, Friday, July 10, 2015 - 00:00
The generosity of unemployment insurance is often cited as a reason for long spells of joblessness. But this view neglects other important, and potentially positive, economic aspects of such programmes. Using Austrian data, this column presents evidence that unemployment insurance has a positive effect on the quality of jobs that recipients find. This can in turn have a positive effect on future tax revenues, and has implications for the debate on optimal insurance generosity.
Jeffrey R. Brown, Chichun Fang, Francisco Gomes, Monday, March 23, 2015 - 00:00
Jan van Ours, Friday, February 27, 2015 - 00:00
Juan Dolado, Monday, February 9, 2015 - 00:00
Philip Jung, Moritz Kuhn, Wednesday, February 4, 2015 - 00:00
Claudio Michelacci, Hernán Ruffo, Tuesday, November 18, 2014 - 00:00
Brian Clark, Clement Joubert, Arnaud Maurel, Sunday, November 16, 2014 - 00:00
Hugh Rockoff, Saturday, October 4, 2014 - 00:00
Nicholas Crafts, Wednesday, August 27, 2014 - 00:00
Pascal Michaillat, Emmanuel Saez, Tuesday, August 12, 2014 - 00:00
High US unemployment rates following the crisis are a primary policy concern, but are poorly explained by existing models. This column introduces a new model of frictional labour and product markets. Price rigidities yield testable predictions pointing to the source of unemployment and product market tightness. Evidence suggests that unemployment fluctuations are driven mostly by aggregate demand shocks.
Michele Battisti, Gabriel Felbermayr, Giovanni Peri, Panu Poutvaara, Friday, August 8, 2014 - 00:00
Immigration continues to be a hotly debated topic in most OECD countries. Economic models emphasising the benefits of immigration for natives have typically neglected unemployment and redistribution – precisely the things voters are most concerned about. This column analyses the effects of immigration in a world with labour market rigidities and income redistribution. In two-thirds of the 20 countries analysed, both high-skilled and low-skilled natives would benefit from a small increase in immigration from current levels. The average welfare gains from immigration are 1.25% and 1.00% for high- and low-skilled natives, respectively.
Yang Liu, Saturday, July 19, 2014 - 00:00
In China, both unemployment and a labour shortage have emerged as problems in recent years. This column explains their co-existence by a decrease in the matching efficiency in the labour market. One way to improve the matching efficiency, though difficult to implement in the short-run, is through the creation of more employment agencies. Companies can benefit if they invest more in recruiting activities.
Kerem Cosar, Nezih Guner, James R Tybout, Monday, July 7, 2014 - 00:00
Trade liberalisations are often accompanied by labour market reforms, making it difficult to isolate their effects. This column discusses the effects of trade liberalisation, globalisation, and labour-market reforms on the Colombian labour market. Reduced trade frictions increased cross-firm wage inequality and shifted the firm-size distribution rightward, with offsetting effects on overall wage inequality. Average income increased, but the gains were concentrated among employees of large, productive firms with access to export markets. Greater trade openness also increased job turnover.
Laurence Ball, Tuesday, July 1, 2014 - 00:00
Whereas textbook macroeconomic theory suggests that output should return to potential after a recession, there is mounting evidence that deep recessions have highly persistent effects on output. This column reports estimates of the long-term damage caused by the Great Recession. In most countries in the sample, the loss of potential output – 8.4% on average – has been almost as large as the loss of actual output. In the countries hit hardest by the recession, the growth rate of potential output is much lower today than it was before 2008.
João Paulo Pessoa, John Van Reenen, Saturday, June 28, 2014 - 00:00
The fall in productivity in the UK following the Great Recession was particularly bad, whereas the hit to jobs was less severe. This column discusses recent research exploring this puzzle. Although the mystery has not been fully solved, an important part of the explanation lies in the flexibility of wages combined with very low investment.