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The Inexorable Recoveries of U.S. Unemployment

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  • Robert E. Hall
  • Marianna Kudlyak

Abstract

Unemployment recoveries in the US have been inexorable. Between 1949 and 2019, the annual reduction in the unemployment rate during cyclical recoveries was tightly distributed around 0.1 log points per year. The economy seems to have an irresistible force toward restoring full employment. Unless another crisis intervenes, unemployment continues to glide down to a level of approximately 3.5 percentage points. Occasionally unemployment rises rapidly during an economic crisis, while most the time, unemployment declines slowly and smoothly at a near-constant proportional rate. We show that similar properties hold for other measures of the US unemployment rate and for the unemployment rates of six other advanced countries.

Suggested Citation

  • Robert E. Hall & Marianna Kudlyak, 2021. "The Inexorable Recoveries of U.S. Unemployment," Working Paper Series 2021-20, Federal Reserve Bank of San Francisco.
    • Handle: RePEc:fip:fedfwp:93023
    DOI: 10.24148/wp2021-20
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    References listed on IDEAS

    as
    1. Andreas Hornstein & Marianna Kudlyak, 2019. "Aggregate Labor Force Participation and Unemployment and Demographic Trends," Working Paper Series 2019-7, Federal Reserve Bank of San Francisco.
    2. Richard K. Crump & Stefano Eusepi & Marc Giannoni & Aysegul Sahin, 2019. "A Unified Approach to Measuring u," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 50(1 (Spring), pages 143-238.
    3. Hall, Robert E. & Kudlyak, Marianna, 2022. "The unemployed with jobs and without jobs," Labour Economics, Elsevier, vol. 79(C).
    4. Victoria Gregory & Guido Menzio & David Wiczer, 2020. "Pandemic Recession: L- or V-Shaped?," Quarterly Review, Federal Reserve Bank of Minneapolis, vol. 40(01), pages 1-31, May.
    5. Hamilton, James D, 1989. "A New Approach to the Economic Analysis of Nonstationary Time Series and the Business Cycle," Econometrica, Econometric Society, vol. 57(2), pages 357-384, March.
    6. Shigeru Fujita & Giuseppe Moscarini, 2017. "Recall and Unemployment," American Economic Review, American Economic Association, vol. 107(12), pages 3875-3916, December.
    7. Robert E. Hall & Marianna Kudlyak, 2022. "Why Has the US Economy Recovered So Consistently from Every Recession in the Past 70 Years?," NBER Macroeconomics Annual, University of Chicago Press, vol. 36(1), pages 1-55.
    8. Cole, Harold L & Rogerson, Richard, 1999. "Can the Mortensen-Pissarides Matching Model Match the Business-Cycle Facts?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(4), pages 933-959, November.
    9. John G. Fernald & Robert E. Hall & James H. Stock & Mark W. Watson, 2017. "The Disappointing Recovery of Output after 2009," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 48(1 (Spring), pages 1-81.
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    Cited by:

    1. Remi Jedwab & Roberto Samaniego & Paul Romer & Asif Islam, 2022. "Scars of Pandemics from Lost Schooling and Experience: Aggregate Implications and Gender Differences Through the Lens of COVID-19," Working Papers 2022-02, The George Washington University, Institute for International Economic Policy.
    2. Fieldhouse, Andrew & Howard, Sean & Koch, Christoffer & Munro, David, 2022. "A New Claims-Based Unemployment Dataset: Application to Postwar Recoveries Across U.S. States," GLO Discussion Paper Series 1066, Global Labor Organization (GLO).
    3. Hall, Robert E. & Kudlyak, Marianna, 2022. "The unemployed with jobs and without jobs," Labour Economics, Elsevier, vol. 79(C).

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    More about this item

    Keywords

    Business cycle; Recovery; Unemployment; Recession;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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