The Labor Market Four Years Into the Crisis : Assessing Structural Explanations March 2012

Four years after the beginning of the Great Recession, the labor market remains historically weak. Many observers have concluded that “structural” impediments to recovery bear some of the blame. This paper reviews such structural explanations. I find that there is little evidence supporting these hypotheses, and that the bulk of the evidence is more consistent with the hypothesis that continued poor performance is primarily attributable to shortfalls in the aggregate demand for labor. * I thank Jared Bernstein, David Card, Larry Kahn, Michael Reich, and Larry Katz for helpful conversations. Tommy Drake and Sarena Goodman provided excellent research assistance. I am grateful for financial support to the Institute for Research on Labor and Employment and the Center for Equitable Growth, both at UC Berkeley, and to the Russell Sage Foundation. Copies of the data and computer programs used to generate the results presented in the paper are available from the author at [email protected].