Working Paper: NBER ID: w0816
Authors: Richard B. Freeman
Abstract: This paper seeks to discover the criteria by which workers are judged to be "troubled," to examine the severity of the economic problems facing "troubled" groups, and to determine whether the condition of these people is relatively permanent or the result of transitory setbacks. The paper provides a broad overview of some of the literature on troubled groups in the labor market, and puts forth several basic propositions about those having trouble in the labor market. Among these are the fact that many workers at the bottom of the income distribution are permanently plagued by problems of low earnings, that workers who drop substantially in the earnings distribution do not recover their previous economic positions, and that personal, unobserved characteristics are important factors in the labor market problems of individuals. Another finding is that areas with high rates of unemployment tend to experience these rates for a decade or more, classifying most regional differences in unemployment as permanent rather than transitory.
Keywords: Labor market; Economic problems; Disadvantaged workers
JEL Codes: J64; J31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| personal unobserved characteristics (C29) | labor market problems (J48) |
| economic growth (O49) | labor market earnings of disadvantaged workers (J79) |
| permanently low earnings (J31) | economic disadvantage (I32) |
| large declines in earnings (E25) | permanent economic status (J63) |
| low wages (J31) | permanent economic disadvantage (J79) |
| high unemployment rates (J64) | conditions for extended periods (C41) |