Working Paper: NBER ID: w17966
Authors: Jesse Rothstein
Abstract: Four years after the beginning of the Great Recession, the labor market remains historically weak. Many observers have concluded that "structural" impediments to recovery bear some of the blame. This paper reviews such structural explanations. I find that there is little evidence supporting these hypotheses, and that the bulk of the evidence is more consistent with the hypothesis that continued poor performance is primarily attributable to shortfalls in the aggregate demand for labor.
Keywords: Labor Market; Great Recession; Structural Explanations; Aggregate Demand
JEL Codes: E24; E32; E6; J21; J3; J63; J64
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| shortfalls in aggregate demand for labor (J23) | continued poor performance of the labor market (F66) |
| unemployment insurance extensions (J65) | labor supply (J20) |
| cyclical factors (E32) | long-term unemployment share (J64) |
| aggregate demand (E00) | labor market outcomes (J48) |
| structural impediments (O17) | continued poor performance of the labor market (F66) |