Labor Market Dynamics and Unemployment: A Reconsideration

Kim B. Clark and

KBC

Kim B. Clark Harvard University

Lawrence H. Summers

Lawrence H. Summers Charles W. Eliot University Professor and President Emeritus - Harvard University @LHSummers

Discussants: Charles C. Holt,

CCH

Charles C. Holt

Martin Neil Baily, and

Martin Neil Baily Senior Fellow Emeritus - Economic Studies, Center on Regulation and Markets

Robert E. Hall

Robert E. Hall Robert and Carole McNeil Joint Hoover Senior Fellow and Professor of Economics - Stanford University

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.