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No Jobs To Stay

August 6, 2010

Long-term unemployment results in skill losses and lower productivity in the future.  This undermines future growth prospects and it may shift up the “natural” rate of unemployment.  So-called hysteresis in unemployment – meaning that it goes up fast but comes down slowly and not fully – has very much been a feature in the experience of other industrialized countries during recent decades.  This is potentially now a major issue for the United States.

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