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Jobless Recoveries

  • David Andolfatto

    (Simon Fraser University)

  • Glenn MacDonald

    (Washington University in St. Louis)

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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File URL: http://128.118.178.162/eps/mac/papers/0412/0412014.pdf
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Paper provided by EconWPA in its series Macroeconomics with number 0412014.

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Length: 27 pages
Date of creation: 30 Dec 2004
Date of revision:
Handle: RePEc:wpa:wuwpma:0412014
Note: Type of Document - pdf; pages: 27
Contact details of provider: Web page: http://128.118.178.162

References listed on IDEAS
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  1. 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, vol. 9(Aug).
  2. Paul Beaudry & Franck Portier, 2004. "Stock Prices, News and Economic Fluctuations," NBER Working Papers 10548, National Bureau of Economic Research, Inc.
  3. Bresnahan, Timothy F. & Trajtenberg, M., 1995. "General purpose technologies 'Engines of growth'?," Journal of Econometrics, Elsevier, vol. 65(1), pages 83-108, January.
  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.
  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.
  6. repec:fth:waterl:9503 is not listed on IDEAS
  7. Jovanovic, Boyan & Rousseau, Peter L., 2005. "General Purpose Technologies," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 18, pages 1181-1224 Elsevier.
  8. Jovanovic, Boyan & MacDonald, Glenn M., 1988. "Competitive Diffusion," Working Papers 88-29, C.V. Starr Center for Applied Economics, New York University.
  9. 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.
  10. Jeremy Greenwood & Glenn M. MacDonald & Guang-Jia Zhang, 1994. "The cyclical behavior of job creation and job destruction: a sectoral model," Discussion Paper / Institute for Empirical Macroeconomics 88, Federal Reserve Bank of Minneapolis.
  11. Marco Lippi & Lucrezia Reichlin, 1994. "Diffusion of technical change and the decomposition of output into trend and cycle," ULB Institutional Repository 2013/10157, ULB -- Universite Libre de Bruxelles.
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