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New Evidenceon Cyclical and Structural Sources of Unemployment, Jinzhu Chen, Bharat Trehan, Prakash Kannan, Prakash Loungani

We provide cross-country evidence on the relative importance of cyclical and structural factors in explaining unemployment, including the sharp rise in U.S. long-term unemployment during the Great Recession of 2007-09. About 75% of the forecast error variance of unemployment is accounted for by cyclical factors-real GDP changes (?Okun‘s Law?), monetary and fiscal policies, and the uncertainty effects emphasized by Bloom (2009). Structural factors, which we measure using the dispersion of industry-level stock returns, account for the remaining 25 percent. For U.S. long-term unemployment the split between cyclical and structural factors is closer to 60-40, including during the Great Recession
Table Of Contents
Cover Page; Title Page; Copyright Page; Contents; I. Introduction; 1. Average Duration of Unemployment (Weeks); 2. Duration of Unemployment (Percent of Labor Force); 3. Change in Unemployment Rate 2007-09 (Percent); II. Measuring Sectoral Shifts; 4. Stock Market Returns Dispersion Index (6-month moving average); III. Candidate Explanations for Changes Duration; 5. Impulse-Response Figures for Unemployment (Univariate Model); 6. Impulse-Response Figures for Long-Term Unemployment (Univariate Model); IV. VARs Estimated on U.S. Data; A. The Effects of Sectoral Shocks
Literary Form
non fiction
Description based upon print version of record
Physical Description
1 online resource (49 p.)
Specific Material Designation
Form Of Item

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