The Plight of the Long-Term Unemployed

The Long-Term Unemployed

A recent study done by Alan Krueger, Judd Cramer, and David Cho of Princeton University on long-term unemployment has painted a bleak picture for anyone that falls into the category stating:

“Although the long-term unemployed have about a one in ten chance of moving into employment in any given month, when they do return to work their new jobs are often transitory. After 15 months, the long-term unemployed are more than twice as likely to have withdrawn from the labor force than to have settled into steady, full-time employment. And when they exit the labor force, the long-term unemployed tend to say that they no longer want a job, suggesting that many labor force exits could be enduring. The subset of the long-term unemployed who do regain employment tend to return to jobs in the same occupations and industries from which they were displaced, suggesting that significant challenges exist for helping the long-term unemployed to transition to growing sectors of the economy. A stronger macroeconomy helps the long-term unemployed in part because it raises demand in their previous sectors. But even in good times, the long-term unemployed are often on the margins of the labor market, with diminished employment prospects and relatively high labor force withdrawal rates.”

They also find that:

“Their (the long-term unemployed) diverse and varied set of characteristics implies that a broad array of policies will be needed to substantially lower the long-term unemployment rate and stem labor force withdrawal, as concentrating on any single occupation, industry, demographic group or region is unlikely to have a substantial impact reducing long-term unemployment by itself. Understanding the labor market and personal hurdles faced by the long-term unemployed should be a priority for future research in order to craft solutions to reduce long-term unemployment.”

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