THE LABOR MARKET FOUR YEARS INTO THE CRISIS: ASSESSING STRUCTURAL EXPLANATIONS

Four years after the beginning of the Great Recession, the labor market remains historically weak. Many observers have concluded that "structural" impediments to recovery bear some of the blame. The author reviews such structural explanations, but after analyzing U.S. data on unemployment and productivity, he finds there is little evidence supporting these hypotheses. He finds that the bulk of the evidence is more consistent with the hypothesis that continued poor performance is primarily attributable to shortfalls in the aggregate demand for labor.