What Type of Unemployment?
By Arnold Kling
Brad DeLong writes,
It seems fairly clear to me that calling this “structural change” is somewhat of a misnomer. Structural change is when workers find jobs in expanding industries. That happens overwhelmingly during booms. For workers to lose jobs in contracting industries and to not find them in expanding industries is not “structural change” but rather something else.
If we were to pump up demand we would pump it up in expanding industries, and so accelerate rather than obstruct labor reallocation.
Thanks to Tyler Cowen for the pointer.
Read the whole thing. It appears to have come from DeLong in the mid-1990’s, not the evil twin abusive blogger.
What I have been trying to do in PSST vs. the Aggregate Production Function, Technological Unemployment: A Partial Equilibrium Example, Who Will Write This Paper, No. 2? and Who Will Write This Paper? is describe a possibility in which structural change is not symmetric. It is possible in the short run for the jobs lost to greatly exceed the jobs gained.
Could “pumping up demand” help in such a situation? Perhaps. But if the recalculation story is right, the higher demand could end up not doing much for employment. Instead, it might only do a lot to raise oil prices.