In case some of my readers want to see “Conservative” economists who would provide it:
The recession of 2007-09 witnessed high rates of unemployment that have been slow to recede. This has led many to conclude that
structural changes have occurred in the labor market and that the economy will not return to the low rates of unemployment that
prevailed in the recent past. Is this true? The question is important because central banks may be able to reduce unemployment
that is cyclic in nature, but not that which is structural. An analysis of labor market data suggests that there are no structural
changes that can explain movements in unemployment rates over recent years. Neither industrial nor demographic shifts nor a mismatch of
skills with job vacancies is behind the increased rates of unemployment. Although mismatch increased during the recession, it
retreated at the same rate. The patterns observed are consistent with unemployment being caused by cyclic phenomena that are more
pronounced during the current recession than in prior recessions.
Ed Lazear was a former chair of the Council of Economic Advisors.
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