Failing the Test? The Flexible U.S. Job Market in the Great Recession

Richard Freeman

No 19587, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The Great Recession tested the ability of the "great U.S. jobs machine" to limit the severity of unemployment in a major economic downturn and to restore full employment quickly afterward. In the crisis the American labor market failed to live up to expectations. The level and duration of unemployment increased substantially in the downturn and the growth of jobs was slow and anemic in the recovery. This article documents these failures and their consequences for workers. The U.S. performance in the Great Recession contravenes conventional views of the virtues of market-driven flexibility compared to institution-driven labor adjustments and the notion that weak labor institutions and greater market flexibility offer the best road to economic success in a modern capitalist economy.

JEL-codes: J0 J01 J08 J64 (search for similar items in EconPapers)
Date: 2013-10
New Economics Papers: this item is included in nep-lab, nep-ltv and nep-pke
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Published as R. B. Freeman, 2013. "Failing the Test? The Flexible U.S. Job Market in the Great Recession," The ANNALS of the American Academy of Political and Social Science, vol 650(1), pages 78-97.

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