The labor market in the great recession-an update to september 2011

Michael W.L. Elsby, Bart Hobijn, Ayşegül Şahin, Robert G. Valletta

Research output: Contribution to journalArticlepeer-review

38 Scopus citations


Since the end of the Great Recession in mid-2009, the unemployment rate has recovered slowly, falling by only 1 percentage point from its peak by September 2011. We find that the lackluster labor market recovery can be traced in large part to weakness in aggregate demand; only a small part seems attributable to increases in labor market frictions. This continued labor market weakness has led to the highest level of long-term unemployment in the postwar period and a blurring of the distinction between unemployment and nonparticipation in the labor force. We show that flows from nonparticipation to unemployment are important for understanding recent changes in the duration distribution of unemployment. Simulations that account for these flows suggest that the labor market is unlikely to be subject to high levels of structural long-term unemployment after aggregate demand recovers.

Original languageEnglish (US)
Pages (from-to)353-371
Number of pages19
JournalBrookings Papers on Economic Activity
Issue number2
StatePublished - 2011
Externally publishedYes

ASJC Scopus subject areas

  • Business, Management and Accounting(all)
  • Economics and Econometrics


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