Unemployment

I know many of you won't "officially" get to this issue until second semester when you address macro, but others will get to it sooner. Some might be teaching macro first, others may be teaching a survey course and get a chance to address unemployment as part of the survey. Regardless, here's an article from The Economist that you will want have available.

The article addresses the unemployment problem in the U.S., and why it doesn't seem to be responding to traditional Keynesian stimulus. The short answer is “this isn't just about weak demand.”

As the article points out, there are issues of structural change (the role of manufacturing and construction in the economy), institutional issues (dual income families are harder to move), and incentives (the impact of extended unemployment benefits). I would suggest uncertainty over future government policy may also be a factor.

There's a related article here.

What are your thoughts?