Economic Quarterly

Second Quarter 2015

The Rise in Long-Term Unemployment: Potential Causes and Implications

Andreas Hornstein and Thomas A. Lubik

Long-term unemployment rose dramatically during the recent recession and remains elevated. In this essay, Andreas Hornstein and Thomas A. Lubik analyze the potential causes of this increase and explore various explanations of “duration dependence,” the fact that the likelihood of finding a job decreases the longer a worker is unemployed. The authors find that more workers with inherently low job finding rates have become unemployed, which suggests that monetary policy may have a limited effect on reducing the incidence of long-term unemployment. The authors also discuss what lessons might be drawn from policy responses to long-term unemployment in Europe.

DOI: http://doi.org/10.21144/eq1010203

Contact Us

Lisa Kenney
(804) 697-8179

Publications image
Get Our Free Publications

To receive a notification by email when Economic Quarterly is posted online or to order single copies of past issues, click on the links below (published online only since 2012).