What is Behind the Rise in Long-Term Unemployment?

Abstract

This article analyzes what is behind the recent unprecedented rise in long-term unemployment and explains what this rise might imply for the economy going forward. In particular, the authors attribute the sharp increase in unemployment duration in 2009 to especially weak labor demand and, to a lesser degree, extensions in unemployment insurance benefits.

Keywords: long-term unemployment, unemployment, unemployment duration, unemployment insurance, Mobility, Unemployment, and Vacancies, Unemployment: Models, Duration, Incidence, and Job Search, Unemployment Insurance, Severance Pay, Plant Closings

JEL Classification: J60, J64, J65