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Jobless Recoveries

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Author Info
David Andolfatto (Simon Fraser University)
Glenn MacDonald (Washington University in St. Louis)

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Abstract

Historically, when an economy emerges from recession, employment grows with, or soon after, the resumption of GDP growth. However, following the two most recent recessions in the United States, employment growth has lagged the recovery in GDP by several quarters, a phenomenon thathas been termed the 'jobless recovery.' To many, a jobless recovery defies explanation since it violates both historical patterns and the predictions of traditional macro theory. We show that a recession followed by a jobless recovery is precisely what neoclassical theory predicts when new technology impacts different sectors of the economy unevenly and is slow to diffuse, and sectoral adjustments in the labor market take time to unfold.

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Publisher Info
Paper provided by EconWPA in its series Macroeconomics with number 0412014.

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Length: 27 pages
Date of creation: 30 Dec 2004
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Handle: RePEc:wpa:wuwpma:0412014

Note: Type of Document - pdf; pages: 27
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E - Macroeconomics and Monetary Economics

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  1. Canadian Macro Study Group
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Trajtenberg, M. & Bresnahan, T.F., 1992. "General Purpose Technologies: "Engines of Growth"," Papers 16-92, Tel Aviv.
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  2. Jovanovic, B. & Macdonald, G.M., 1988. "Competitive Diffusion," RCER Working Papers 160, University of Rochester - Center for Economic Research (RCER).
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  3. David Andolfatto & Glenn MacDonald, 1998. "Technology Diffusion and Aggregate Dynamics," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 1(2), pages 338-370, April. [Downloadable!] (restricted)
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  4. Mark Bils & Peter J. Klenow, 2002. "Some Evidence on the Importance of Sticky Prices," NBER Working Papers 9069, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  5. Lilien, David M, 1982. "Sectoral Shifts and Cyclical Unemployment," Journal of Political Economy, University of Chicago Press, vol. 90(4), pages 777-93, August. [Downloadable!] (restricted)
  6. Greenwood, Jeremy & MacDonald, Glenn M & Zhang, Guang-Jia, 1996. "The Cyclical Behavior of Job Creation and Job Destruction: A Sectoral Model," Economic Theory, Springer, vol. 7(1), pages 95-112, January.
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  7. Paul Beaudry & Franck Portier, 2004. "Stock Prices, News and Economic Fluctuations," NBER Working Papers 10548, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  8. Erica L. Groshen & Simon Potter, 2003. "Has structural change contributed to a jobless recovery?," Current Issues in Economics and Finance, Federal Reserve Bank of New York, issue Aug. [Downloadable!]
  9. Lippi, Marco & Reichlin, Lucrezia, 1994. "Diffusion of Technical Change and the Decomposition of Output into Trend and Cycle," Review of Economic Studies, Blackwell Publishing, vol. 61(1), pages 19-30, January. [Downloadable!] (restricted)
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  10. Boyan Jovanovic & Peter L. Rousseau, 2005. "General Purpose Technologies," NBER Working Papers 11093, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Kathryn Koenders & Richard Rogerson, 2005. "Organizational dynamics over the business cycle: a view on jobless recoveries," Review, Federal Reserve Bank of St. Louis, issue Jul, pages 555-580. [Downloadable!]
  2. André Kurmann & Nicolas Petrosky-Nadeau, 2007. "Search Frictions in Physical Capital Markets as a Propagation Mechanism," Cahiers de recherche 0712, CIRPEE. [Downloadable!]
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This page was last updated on 2009-11-3.

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