Jobless recoveries and the wait-and-see hypothesis
In January 2005, after more than three years of sluggish employment growth, the U.S. economy finally recovered the jobs lost during the 2001 recession. Baffled by such a delayed rebound in payrolls, many speculated about the cause. Inevitably, observers compared the 2001 and 1991 recoveries, both widely considered to have been jobless. Schreft and Singh showed previously that one common feature of the first year of the jobless recoveries was the greater use of just-in-time employment practices. They also speculated that the greater availability of just-in-time employment practices contributed to the recoveries’ lack of job growth. This explanation of delayed hiring is termed the “wait-and-see hypothesis.” Flexible hiring practices allow firms to more easily adjust output in the short term without hiring full-time, potentially permanent workers. This practice is especially effective around the troughs of business cycles, when there is uncertainty about the strength of the recovery. As a result, firms are willing to wait to hire until they see sufficient improvement in business conditions to justify expanding payrolls. Schreft, Singh, and Hodgson take a longer-term perspective, considering the behavior of employment in the first three years of the jobless recoveries. They also describe how a wait-and-see approach to hiring can contribute to such recoveries
Volume (Year): (2005)
Issue (Month): Q IV ()
|Contact details of provider:|| Postal: One Memorial Drive, Kansas City, MO 64198|
Phone: (816) 881-2254
Web page: http://www.kansascityfed.org
More information through EDIRC
|Order Information:|| Email: |
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.:
- Canova, Fabio, 1998.
"Detrending and business cycle facts,"
Journal of Monetary Economics,
Elsevier, vol. 41(3), pages 475-512, May.
- Canova, Fabio, 1993. "Detrending and Business Cycle Facts," CEPR Discussion Papers 782, C.E.P.R. Discussion Papers.
- Erica L. Groshen & Simon M. Potter, 2003. "Has structural change contributed to a jobless recovery?," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 9(Aug).
- Julie L. Hotchkiss, 2005. "Employment growth and labor force participation: how many jobs are enough?," Economic Review, Federal Reserve Bank of Atlanta, issue Q 1, pages 1-13.
- Julie L. Hotchkiss, 2004. "Employment growth and labor force participation: how many jobs are enough?," FRB Atlanta Working Paper 2004-25, Federal Reserve Bank of Atlanta.
- Bikhchandani, Sushil & Hirshleifer, David & Welch, Ivo, 1992. "A Theory of Fads, Fashion, Custom, and Cultural Change in Informational Cascades," Journal of Political Economy, University of Chicago Press, vol. 100(5), pages 992-1026, October.
- Sushil Bikhchandani & David Hirshleifer & Ivo Welch, 2010. "A theory of Fads, Fashion, Custom and cultural change as informational Cascades," Levine's Working Paper Archive 1193, David K. Levine.
- Mark E. Schweitzer, 2003. "Another jobless recovery?," Economic Commentary, Federal Reserve Bank of Cleveland, issue Mar.
- Abhijit V. Banerjee, 1992. "A Simple Model of Herd Behavior," The Quarterly Journal of Economics, Oxford University Press, vol. 107(3), pages 797-817.
- Wynne, Mark A. & Balke, Nathan S., 1992. "Are deep recessions followed by strong recoveries?," Economics Letters, Elsevier, vol. 39(2), pages 183-189, June.
- Wynne, Mark A. & Balke, Nathan S., 1992. "Are deep recessions followed by strong recoveries?," Working Papers 9201, Federal Reserve Bank of Dallas.
- Chamley, Christophe & Gale, Douglas, 1994. "Information Revelation and Strategic Delay in a Model of Investment," Econometrica, Econometric Society, vol. 62(5), pages 1065-1085, September.
- Gale, D. & Chamley, C., 1992. "Information Revelation and Strategic Delay in a Model of Investment," Papers 10, Boston University - Department of Economics.
- C. Alan Garner, 2004. "Offshoring in the service sector : economic impact and policy issues," Economic Review, Federal Reserve Bank of Kansas City, issue Q III, pages 5-37. Full references (including those not matched with items on IDEAS)