Afternoon Must Read: Matthew Klein: Jae Song and Till von Wachter on Long-Term Unemployment and Hysteresis

**Matthew Klein:** This time is different, long-term unemployment edition: “Jae Song and Till von Wachter…

>…the impact of the most recent recession on long-term unemployment was not actually that unusual given the number of jobs lost at the outset. The paper also presents some encouraging evidence that many of those who appear to have given up hope of finding a job could rejoin the labour force if the economy keeps expanding, as well as sobering demonstrations of the permanent costs of being laid off…. Long-term non-employment in the immediate aftermath of the Great Recession was not much worse than it was in the early 1980s for most cohorts, with the notable exception of young men…. As the paper puts it: ‘There is no evidence that the rate of exit from long term nonemployment has slowed during the Great Recession compared to the patterns in all episodes since the 1990s.’ But this is not all good news… ‘five to ten years after the Great Recession the employment population ratio would be predicted to be 1 to 2 percentage points lower than it was before the recession’…