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Failing on Two Fronts: The U.S. Labor Market Since 2000

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  • John Schmitt

Abstract

This report argues that a key driver in rising inequality and a decline in the employment to population ratio is conscious economic policy, with a particularly important and under-appreciated role for macroeconomic policy. The paper first demonstrates the remarkable “flexibility” of U.S. labor markets relative to the situation in other rich economies. The paper then links this policy-induced flexibility to high and rising inequality and shows that such flexibility ceased long ago to contribute --if it ever did-- to greater job creation.

Suggested Citation

  • John Schmitt, 2015. "Failing on Two Fronts: The U.S. Labor Market Since 2000," CEPR Reports and Issue Briefs 2015-05, Center for Economic and Policy Research (CEPR).
  • Handle: RePEc:epo:papers:2015-05
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    File URL: http://www.cepr.net/documents/failure-two-fronts-2015-01.pdf
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    References listed on IDEAS

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    1. Daron Acemoglu & David Autor, 2012. "What Does Human Capital Do? A Review of Goldin and Katz's The Race between Education and Technology," Journal of Economic Literature, American Economic Association, vol. 50(2), pages 426-463, June.
    2. Maarten Goos & Alan Manning, 2007. "Lousy and Lovely Jobs: The Rising Polarization of Work in Britain," The Review of Economics and Statistics, MIT Press, vol. 89(1), pages 118-133, February.
    3. Saez, Emmanuel & Zucman, Gabriel, 2014. "Wealth Inequality in the United States since 1913: Evidence from Capitalized Income Tax Data," CEPR Discussion Papers 10227, C.E.P.R. Discussion Papers.
    4. Howell, David (ed.), 2004. "Fighting Unemployment: The Limits of Free Market Orthodoxy," OUP Catalogue, Oxford University Press, number 9780195165852.
    5. David S. Lee, 1999. "Wage Inequality in the United States During the 1980s: Rising Dispersion or Falling Minimum Wage?," The Quarterly Journal of Economics, Oxford University Press, vol. 114(3), pages 977-1023.
    6. Howell David R. & Baker Dean & Glyn Andrew & Schmitt John, 2007. "Are Protective Labor Market Institutions at the Root of Unemployment? A Critical Review of the Evidence," Capitalism and Society, De Gruyter, vol. 2(1), pages 1-73, May.
    7. David H. Autor & Frank Levy & Richard J. Murnane, 2002. "Upstairs, Downstairs: Computers and Skills on Two Floors of a Large Bank," ILR Review, Cornell University, ILR School, vol. 55(3), pages 432-447, April.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    jobs; employment; labor market; inequality; economic policy;

    JEL classification:

    • J - Labor and Demographic Economics
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor

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