Recession’s Hangover Blurs the Way to a Broad Recovery
Another Harvard economist, the former Treasury Secretary Lawrence H. Summers, said Mr. Yagan’s research and other evidence made it “difficult to escape the conclusion”
that recessions now do permanent — or at least “quasi-permanent” — damage to the economy.
Other research has explored the possible role of the disability insurance system or even
video games in keeping displaced workers — particularly men — out of the job market.
“There are a bunch of people who were knocked out by the recession who aren’t coming back even in the places where unemployment
has fallen,” Mr. Summers said, although he said he believed there is room for further improvement in the labor market.
That could carry a lesson for policy makers: If the United States no longer recovers as quickly from recessions as it once did,
and if those slow recoveries can leave permanent scars on workers, then it is all the more important to kick-start the economy before too much damage is done
“We were on a kind of trend where that group of people was going to find it harder
and harder to find productive outlets in the labor market, and the recession kind of accelerated that,” Ms. Kahn said.
A variety of evidence, including declining rates of entrepreneurship
and falling job turnover, suggest the nation’s economy has become less dynamic and flexible since 2000, which could have made it harder for workers and companies alike to adapt following the shock of a recession.
The employment rate — the share of the population with a job each month — has come a long way back for Americans ages 25 to 54.
