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Uncertainty and the slow labor market recovery

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  • Sylvain Leduc
  • Zheng Liu

Abstract

Since 2009, U.S. job vacancies have increased but unemployment has fallen more slowly than in past recoveries. There is evidence that heightened uncertainty about economic policy has been an important factor behind this change. Increased uncertainty may discourage businesses from filling vacancies, thereby raising unemployment. An estimate indicates that, without policy uncertainty, the unemployment rate in late 2012 would have been close to 6.5%, 1.3 percentage points lower than the actual rate.

Suggested Citation

  • Sylvain Leduc & Zheng Liu, 2013. "Uncertainty and the slow labor market recovery," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue july22.
  • Handle: RePEc:fip:fedfel:y:2013:i:july22:n:2013-21
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    File URL: http://www.frbsf.org/economic-research/publications/economic-letter/2013/july/us-labor-market-uncertainty-slow-recovery/
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    File URL: http://www.frbsf.org/economic-research/publications/economic-letter/2013/july/us-labor-market-uncertainty-slow-recovery/el2013-21.pdf
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    References listed on IDEAS

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    1. Mary C. Daly & Bart Hobijn & Ayseg├╝l Sahin & Robert G. Valletta, 2012. "A Search and Matching Approach to Labor Markets: Did the Natural Rate of Unemployment Rise?," Journal of Economic Perspectives, American Economic Association, vol. 26(3), pages 3-26, Summer.
    2. Steven J. Davis & R. Jason Faberman & John C. Haltiwanger, 2013. "The Establishment-Level Behavior of Vacancies and Hiring," The Quarterly Journal of Economics, Oxford University Press, vol. 128(2), pages 581-622.
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    Citations

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    Cited by:

    1. Gabriel P. Mathy, 2015. "Hysteresis and Persistent Long-Term Unemployment: Lessons from the Great Depression and World War II," Working Papers 2015-02, American University, Department of Economics.
    2. Bordo, Michael D. & Duca, John V. & Koch, Christoffer, 2016. "Economic policy uncertainty and the credit channel: Aggregate and bank level U.S. evidence over several decades," Journal of Financial Stability, Elsevier, vol. 26(C), pages 90-106.
    3. repec:fip:fedfel:00125 is not listed on IDEAS

    More about this item

    Keywords

    Labor market ; Economic policy;

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