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Economics 2012. Persistent Unemployment and the Debate Over How to Address the Problem Robert Ricketts Frank M. Burke Chair in Taxation Rawls College of Business Texas Tech University March 2012. Jobless Claims—Falling, but Still High. Measures of Unemployment: U1-U6.
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Economics 2012 Persistent Unemployment and the Debate Over How to Address the Problem Robert Ricketts Frank M. Burke Chair in Taxation Rawls College of Business Texas Tech University March 2012
Consequences of Long-term Unemployment • Wachter, Song, Manchester (2009)—workers who lost jobs during the recession of the early 1980s earned 20% less than their peers 20 yrs later • Sullivan and Wachter (2009)—workers laid off at age 40 died sooner (at least 1 yr) than their peers • Oreopoulos, Page, Stevens (2008)—children of laid-off workers had lower earnings than their peers • Aaronson, Mazumder, Schechter (2010)—odds of finding a job next month diminish with each month of unemployment: • 34% of workers in 1st month of unemployment find job next month • 19% of workers in 7th month of unemployment find job next month (for more, see Benyamin Appelbaum, “The Enduring Consequences of Unemployment,” Economix blog, NYT, 3/28/2012, 10:30 am)
So … What to Do? Current Debate is About What Government Should Do: Nothing? Stimulus—if so, what kind? Is there a role for tax policy? Is the budget deficit relevant?
First, What’s Holding Down Consumption (besides job uncertainty)
Deficits and Government Spending—Comparing the Last Seven Administrations
Components of Government Spending:1962-2022 (post 2012 figures projected)
Reducing Unemployment and Government Spending are Inextricably Linked
“Out of Control” Spending?Do the Markets Anticipate Inflation?
