3rd Annual CHCS Employment Conference - Employment Consequences of the Great Recession - September 14-15, 2012

Banner image for the Annual Employment Conference

Four years after the onset of the Great Recession, labor market outcomes in the U.S. remain depressed. The fraction of 16- to 64-year-old individuals who are employed fell from above 72 percent in 2007 to less than 67 percent in 2009 and remains stuck there. The unemployment rate rose from 4.5 percent to 10 percent and still hovers above 8 percent. And the fraction of unemployed workers who have been looking for a job for over six months has increased to a share not seen in the United States in at least 60 years. The Atlanta Fed's Center for Human Capital Studies hosted a conference last weekend, organized by Richard Rogerson (Princeton University), Robert Shimer (University of Chicago), and the Atlanta Fed's Melinda Pitts that explored why the employment losses were so large and why the labor market recovery has been so weak. Examining these questions is important because different hypotheses about the nature of the recession suggest that different policy interventions may help to accelerate the recovery.

The discussions at the conference questioned the usefulness of labels like deficient demand, structural unemployment, and cyclical unemployment. These terms mean different things in different contexts and do not clarify the key causal factors. Explanations such as "employment is slow because uncertainty is high" could easily fit under any of these banners. Instead, isolating the key changes that have taken place in the U.S. economy, and then scrutinizing the factors that have influenced how those changes have affected the labor market, would be more conducive to arriving at answers.

Agenda and papers

Friday, September 14, 2012

Dennis Lockhart, president and chief executive officer, Federal Reserve Bank of Atlanta

Session 1
Melinda Pitts,
director of the Center for Human Capital Studies, Federal Reserve Bank of Atlanta

"What Explains High Unemployment? The Aggregate Demand Channel" PDF icon
Atif Mian, professor of economics and public policy, Princeton University
Coauthor: Amir Sufi, University of Chicago

Discussant: Lee Ohanian, professor of economics, University of California, Los Angeles

"Manufacturing Busts, Housing Booms, and Declining Employment: A Structural Explanation" PDF icon
Erik Hurst, V. Duane Rath Professor of Economics and the John E. Jeuck Faculty Fellow, University of Chicago
Coauthors: Matt Notowidigdo, University of Chicago Booth School of Business
Kerwin Charles, University of Chicago

Discussant: Henry S. Farber, Hughes-Rogers Professor of Economics, Princeton University

"On the Importance of the Participation Margin for Labor Market Fluctuations" PDF icon
Presenter: Michael Elsby, professor of economics, University of Edinburgh
Coauthors: Ayşegül Şahin, Federal Reserve Bank of New York
Bart Hobijn, Federal Reserve Bank of San Francisco

Discussant: Rob Shimer, Alvin H. Baum Professor in Economics and the College, University of Chicago

"The Labor Market Four Years Into the Crisis: Assessing Structural Explanations" PDF icon
Jesse Rothstein, associate professor of public policy and economics, University of California, Berkeley

Discussant: Jason Faberman, senior economist, Federal Reserve Bank of Chicago

Saturday, September 15, 2012

Session 2
Richard Rogerson, professor of economics and public affairs, Princeton University

"Uncertainty, Productivity, and Unemployment in the Great Recession" PDF icon
Edouard Schaal, assistant professor of economics, New York University

Discussant: Eric Smith, professor and department head of economics, University of Essex

"Measuring Economic Policy Uncertainty" PDF icon offsite icon
Steve Davis, William H. Abbott Professor of International Business and Economics and deputy dean for faculty, University of Chicago
Coauthors: Scott R. Baker, Stanford University
Nicholas Bloom, Stanford University

Discussant: Sam Schulhofer-Wohl, senior economist, Federal Reserve Bank of Minneapolis

"Viewing Job-Seekers' Reservation Wages and Acceptance Decisions through the Lens of Search Theory" PDF icon offsite icon
Robert Hall, Robert and Carole McNeil Joint Hoover Senior Fellow and Professor of Economics, Stanford University

Discussant: Andreas Mueller, assistant professor of finance and economics, Columbia University

"The Trend Is the Cycle: Job Polarization and Jobless Recoveries" PDF icon offsite icon
Nir Jaimovich, associate professor of economics, Duke University
Coauthor: Henry Siu, University of British Columbia

Discussant: Marianna Kudlyak, economist, Federal Reserve Bank of Richmond

"The Effect of Unemployment Insurance Extensions on Reemployment Wages"
Johannes Schmieder, assistant professor, Boston University
Coauthors: Till M. von Wachter, Columbia University
Stefan Bender, Institute for Employment Research of the German Federal Employment Agency

Discussant: Fatih Karahan, economist, Federal Reserve Bank of New York

Closing Remarks
Dave Altig, executive vice president and director of research, Federal Reserve Bank of Atlanta