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Why does Alan Krueger have a job?

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Are the Long-Term Unemployed on the Margins of the Labor Market?

By: Alan B. Krueger, Judd Cramer and David Cho

ABSTRACT

The short-term unemployment rate is a much stronger predictor of inflation and real wage growth than the overall unemployment rate in the U.S. Even in good times, the long-term unemployed are on the margins of the labor market, with diminished job prospects and high labor force withdrawal rates, and as a result they exert little pressure on wage growth or inflation.

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Submitted by Hugh on

This looks like yet another stab by an Establishment economist to whittle the jobs crisis out of existence and the even more profoundly damaged state of labor behind it. Note the direct tie in between real wage growth and inflation. In the neoliberal world, this is why real wage growth needs to be combatted. It is by definition inflationary. CEO compensation can be in the stratosphere completely untethered to the actual health of a company. The rich and the Fed can blow bubbles one after the other, but what gets focussed on and smeared with the inflationary tar? Wages.

Again it is important to note that this paper is part of a concerted effort presently to raise the level of structural unemployment/NAIRU (a dubious concept in and of itself) to current levels: 6.5%-6.7%. This effectively declares the jobs calamity over.

Hugh