Jobless Recovery

A recent note mentioned the concept “jobless recovery” in the United States, which refers to periods when the economy grew and the employment did not grow, at least for 5 or 6 quarters.

Researchers point out 4 reasons due to which a jobless recovery can present itself:

• Organizational Restructuring à if the recovery periods are extended, then the jobless recovery will too.
• Sectoral rellocation à permanent shifts in the distribution of workers throughout the economy.
• Innovations in labor demand à many employers will hire half-time employees or extra-hours until they´re certain the economy will grow.
• Shift in labor supply à the number of self-employed people grows, or they stop looking for a job.

The following graph shows the mentioned phenomena after the Mexican recession in 2001.