This time is not that different, long-term unemployment edition

If we were asked to make the Great Recession look radically different from all other postwar US recessions, we would point to this chart:

It looks as if people who lost their jobs in 2007-2009 are much more likely to remain unemployed — 5 years after the recession officially ended — than their predecessors. On top of that, of course, is the massive and sustained decline in the share of working-age people with a job:

But an intriguing paper by Jae Song and Till von Wachter presented at this year’s Jackson Hole symposium suggests that 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.

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