Author Description

As we entered 2010, the average length of an ongoing spell of unemployment in the U.S. was more than 30 weeks ¿ the longest recorded in the post-WW2 era. Remarkably, more than 4% of the labor force were out of work for more than 26 weeks. In contrast, the last time unemployment reached 10% in the U.S., in the early 1980s, the share of the labor force that was long-term unemployed peaked at 2.6%. This article analyzes what is behind the recent unprecedented rise in long-term unemployment and explains what this rise might imply for the economy going forward. The authors attribute the sharp increase in unemployment duration in 2009 to esp. weak labor demand and, to a lesser degree, extensions in unemployment insur. benefits.