BPEA | 1979 No. 1

Labor Market Dynamics and Unemployment: A Reconsideration

Kim B. Clark and
Kim B. Clark Harvard University
Lawrence H. Summers
Lawrence H. Summers Charles W. Eliot University Professor and President Emeritus - Harvard University
Discussants: Charles C. Holt, Martin Neil Baily, and Robert E. Hall
Robert Hall Headshot
Robert E. Hall Robert and Carole McNeil Joint Hoover Senior Fellow and Professor of Economics - Stanford University

1979, No. 1

ECONOMISTS in recent years have come to view unemployment as a dynamic phenomenon. Both theoretical and empirical research have emphasized the role of turnover in understanding unemployment. The instability of employment, the brevity of unemployment spells, and the large flows into and out of unemployment have been central themes of this work Where the unemployed were once viewed as a stagnant pool of job seekers awaiting a business upturn,today economists describe unemployment in quite different terms.A leading contemporary macroeconomics textbook, after reviewing published evidence on unemployment dynamics, found: “the important conclusion [is] that average unemployment is not the result of a few people being unemployed for a long period of time.