This Thursday, the La Follette School and the UW Center for World Affairs and the Global Economy is holding a conference on “Long term unemployment in industrial countries: Causes, Consequences and Policy Responses”. In a timely report, the OECD last week released Persistence of High Unemployment: What Risks? What Policies?. From the report:

Nearly two years after production began to recover from the worst
recession to have hit OECD countries since the 1930s, the labour market
situation remains a major preoccupation. At the end of 2010, the average
OECD unemployment rate was still close to the historical peak reached
during the crisis. In 12 OECD countries it remained two percentage points
or more above the pre-crisis level, and even where the rise in joblessness
was less severe, the recovery has been generally too weak so far to allow
for a significant fall in unemployment.

…

 

Countries with high unemployment levels and a high share of longterm
unemployment face a higher risk of unemployment persistence
during the recovery:

 

• Before the crisis, relatively weak flows into and out of unemployment
  as well as high long-term unemployment continued to be observed in
  large continental EU countries, while pre-crisis turnover was stronger
  and long-term unemployment lower in North America, Australia and
  New Zealand.
• However, a striking feature of the current situation is an unusually
  high share of long-term unemployment in the United States,
  occurring against the backdrop of a sharp rise in unemployment and
  a trend decline in outflows from unemployment. While the
  US outflow rate remains significantly higher than in continental EU countries, and although the US unemployment rate has begun to
  decline, such developments raise concerns about future persistence
  of unemployment.

Here is a figure from the report, illustrating how long term unemployment has become more pronounced in the wake of the Great Recession.

Figure 4 from Persistence of High Unemployment: What Risks? What Policies?

Here is the agenda for the conference:

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Sponsored by <a
href=”http://wage.wisc.edu/”>WAGE and <a
href=”http://www.lafollette.wisc.edu/”>Robert M. La Follette School of Public
Affairs

<span
style=’font-size:11.0pt’>Co-sponsored by Dept.
of Economics, Dept. of Political Science, Institute for Research on Poverty, Center for European Studies, and EU Center of Excellence

<span
style=’font-size:14.0pt;mso-bidi-font-size:12.0pt;color:black’>Conference on Long term unemployment in industrial countries: Causes, Consequences and Policy Responses

 

<span
style=’font-size:11.0pt’>Menzie
Chinn and Mark Copelovitch,
Organizers

<span
style=’color:black’>

<span
style=’font-size:11.0pt;color:black’>April 28, 2011

 

<span
style=’font-size:11.0pt;color:black’>University of <st1:PlaceName
w:st=”on”>Wisconsin Pyle
Center, 702 Langdon St.

<st1:City
w:st=”on”>Madison<span
style=’font-size:11.0pt;color:black’>, Wisconsin<span
style=’font-size:11.0pt;color:black’>

The Great Recession has sparked a debate over the key causes of the surge in unemployment in the industrial countries. One camp argues that the largest component of new unemployment in the United States and other advanced economies arises from cyclical factors, namely the sharp decline in aggregate demand in the wake of the global economic crisis. Another camp views the bulk of the increase in unemployment as structural in nature, arising either from a mismatch between labor skills and the skills demanded by employers, geographical mismatch, or the rising relative cost of labor. Still others argue that government policies have exacerbated these economic trends and contributed to the persistence and severity of the unemployment problem in the industrialized countries. In any case, elevated levels of long term unemployment are likely to persist for the foreseeable future, posing a series of challenges to policymakers throughout the industrialized world.
In this conference, we aim to analyze the economic and political causes and consequences of long-term unemployment, as well as the potential policy responses that governments might pursue to address this problem in the coming years. The audience for the morning session will encompass both the general public and the UW community, while the afternoon sessions will be particularly of interest to UW students and faculty.

Open session: Alumni Lounge

 

9am-11am. Panel – Long term unemployment in industrial countries: Causes, Consequences and Policy Responses

 

• Moderator: Tim Smeeding, Director, IRP, and La Follette, UW
• Panelist: Prakash Loungani, Advisor, Research Department, IMF
• Panelist: Kenneth Scheve, Professor of Political Science, Yale
• Panelist: Phillip Swagel, Professor of Public Policy, U.Maryland, and former Asst. Secretary of Treasury for Economic Policy
• Panelist: Rob Valletta, Research Advisor, Federal Reserve Bank of San Francisco

 

Academic sessions:

 

1:30pm-3pm. Session 1: Politics, and Policy (in conjunction with the Political Economy workshop)

 

• Chair: Mark Copelovitch, Political Science and La Follette, UW
• Presenter: Kenneth Scheve, Political Science, Yale University: “Envy and Altruism in Hard Times”.
• Discussant: David Weimer, Dept. of Political Science and La Follette, UW
• Presenter: Phillip Swagel, Public Policy, U. Maryland, and Kenneth Troske, Economics, U.Kentucky, “Training: A Proposal”.
• Discussant: Carolyn Heinrich, La Follette, UW

 

3:30pm-5pm. Session 2: Identifying the sources of long term unemployment

 

• Chair: Tom Deleire, La Follette and Population Health, UW
• Presenter: Prakash Loungani, IMF: “Cyclical versus structural unemployment”
• Discussant: Daniel Aaronson, Federal Reserve Bank of Chicago
• Presenter: Rob Valletta, Federal Reserve Bank of San Francisco: “Rising Unemployment Duration in the United States: Composition or Behavior?”
• Discussant: Rasmus Lentz, Dept. of Economics, UW

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More on structural/cyclical issues here: [1] [2] [3] [4]. Assessing the Austrian view: [5]. Former CEA Chair Romer’s op-ed on long term unemployment. Nobel Laureate (and Fed Governor nominee) Peter Diamond’s Nobel Prize Lecture here.