Hysteresis in Labor Markets? Evidence from Professional Long-Term Forecasts

We explore the long-term impact of economic booms on labor market outcomes using a novel approach based on revisions to professional forecasts over the past 30 years for 34 advanced economies. We find that when employment rises unexpectedly, forecasters typically raise their long-term forecasts of e...

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Bibliographic Details
Main Author: Bluedorn, John
Other Authors: Leigh, Daniel
Format: eBook
Language:English
Published: Washington, D.C. International Monetary Fund 2019
Series:IMF Working Papers
Subjects:
Online Access:
Collection: International Monetary Fund - Collection details see MPG.ReNa
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245 0 0 |a Hysteresis in Labor Markets? Evidence from Professional Long-Term Forecasts  |c John Bluedorn, Daniel Leigh 
260 |a Washington, D.C.  |b International Monetary Fund  |c 2019 
300 |a 22 pages 
651 4 |a United States 
653 |a Labour; income economics 
653 |a Employment; Economic theory 
653 |a Unemployment: Models, Duration, Incidence, and Job Search 
653 |a Labor markets 
653 |a Aggregate Labor Productivity 
653 |a Unemployment 
653 |a Demand and Supply of Labor: General 
653 |a Aggregate Human Capital 
653 |a Labor 
653 |a Labor Force and Employment, Size, and Structure 
653 |a Cycles 
653 |a Labor force 
653 |a General Outlook and Conditions 
653 |a Labor force participation 
653 |a Labor market 
653 |a Business Fluctuations 
653 |a Studies of Particular Policy Episodes 
653 |a Wages 
653 |a Unemployment rate 
653 |a Intergenerational Income Distribution 
653 |a Labor Standards: Labor Force Composition 
653 |a Employment 
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520 |a We explore the long-term impact of economic booms on labor market outcomes using a novel approach based on revisions to professional forecasts over the past 30 years for 34 advanced economies. We find that when employment rises unexpectedly, forecasters typically raise their long-term forecasts of employment by more than one-for-one and also expect a strong rise in labor force participation, suggesting more persistent effects than is traditionally assumed. Economic booms associated with changes in aggregate demand, when inflation is rising and unemployment falling unexpectedly, also come with persistent long-term effects on expected employment and labor force participation, suggesting positive hysteresis. Our forecast evaluation tests indicate that forecasters are, on average, unbiased in their assessment of these positive, persistent effects