What is a Modern Recession?
Unemployment rises not because of a bulge of layoffs but because workers entering job search—from previous jobs, from school, and from home activities—experience unusual difficulty in finding jobs.
Among other things, this means that stories on layoffs, which are treated as very important in the press, are in fact not very significant for the overall economy. Basically, if you have millions of people leaving jobs and taking new jobs each month, a layoff of 10,000 or 15,000 does not mean much to the over unemployment statistics.
For Discussion. Does this model of recessions have policy implications that differ from the standard view that recessions are periods of unusually heavy layoffs?