The Unassuming Economist

Is the increase in unemployment cyclical or structural? In an article released today by the IMF, Mai Dao and I summarize some new evidence on this topic. A recovery in output, using monetary and fiscal policy tools, takes too long to lift the boats of the long-term unemployed, and even then does not give them much of a lift. But whether it’s cyclical or structural, unemployment takes a severe human toll and merits a decisive policy response, as we discuss in the article. A longer version is available here.

• Is the recent increase in unemployment cyclical or structural?
• Is there is a link between inequality, over-borrowing and financial crises?

I was unemployed for a year. It was the most difficult time of my life. I was down to my girlfriend’s last dollar. Then, figuring that she was already in graduate school and had no need for them, I started selling off her undergraduate textbooks. Luckily, she had been a double major, so that kept me going for a while. Thirty years later, I can joke about it. But I know that unemployment is no joking matter, and particularly not for the 210 million people across the globe who are unemployed this Labor Day.

Here’s a paper I’ve written on the human cost of unemployment (lost earnings; lower life expectancy; lower earnings and academic achievement for children of the unemployed) and what can be done to get people back to work.

My institution is working with the International Labour Organization to draw attention to the unemployment crisis and to promote discussion of how to cure it. Give us your suggestions at: http://www.osloconference2010.org/