Some Indications of Structural Unemployment
By Arnold Kling
Even prior to the financial crisis, the median duration of unemployment was in severe recession territory. Now, it is through the roof.
In manufacturing, it almost appears that employment and output are decoupled. Output can increase while employment declines or just edges up.
Finally, Stephen Williamson compares Canada and the U.S. in terms of output relative to trend and the unemployment rate.
The output drops are similar, but the unemployment rate behavior is not. Note, however, that I prefer the employment/population ratio to the unemployment rate.
Only half of the drop from 2000 to present took place during the 2008-2009 recession. And I think even that represents an acceleration of structural unemployment. What fraction of those jobs do we think are coming back?
Or, to put it another way, where do you think that ratio would be today if nominal GDP had remained on its trend? I think it would still be under 60. The extra nominal GDP would show up in part as a higher price level and in part as more jobless output, as in the graph of manufacturing above.