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Failing the Test? The Flexible U.S. Job Market in the Great Recession

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  • Richard B. Freeman

Abstract

The Great Recession tested the ability of the "great U.S. jobs machine" to limit the severity of unemployment in a major economic downturn and to restore full employment quickly afterward. In the crisis the American labor market failed to live up to expectations. The level and duration of unemployment increased substantially in the downturn and the growth of jobs was slow and anemic in the recovery. This article documents these failures and their consequences for workers. The U.S. performance in the Great Recession contravenes conventional views of the virtues of market-driven flexibility compared to institution-driven labor adjustments and the notion that weak labor institutions and greater market flexibility offer the best road to economic success in a modern capitalist economy.

Suggested Citation

  • Richard B. Freeman, 2013. "Failing the Test? The Flexible U.S. Job Market in the Great Recession," NBER Working Papers 19587, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:19587
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    Cited by:

    1. Bas Weel, 2015. "Unemployment: The Great Recession and Beyond," De Economist, Springer, vol. 163(4), pages 405-413, December.
    2. Jovanovic, Branimir & Petreski, Marjan, 2014. "Monetary policy, exchange rates and labor unions in SEE and the CIS during the financial crisis," Economic Systems, Elsevier, vol. 38(3), pages 309-332.
    3. Judzik, Dario, 2014. "Heterogeneous labor demand: sectoral elasticity and trade effects in the U.S., Germany and Sweden," MPRA Paper 62768, University Library of Munich, Germany.
    4. Michael Graff & Massimo Mannino & Michael Siegenthaler, 2014. "The Swiss "Job Miracle"," KOF Working papers 14-368, KOF Swiss Economic Institute, ETH Zurich.

    More about this item

    JEL classification:

    • J0 - Labor and Demographic Economics - - General
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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