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Sluggish US employment recovery after the Great Recession: Cyclical or structural factors?

Marcella Lucchetta () and Antonio Paradiso ()

Economics Letters, 2014, vol. 123, issue 2, 109-112

Abstract: This paper aims at investigating the causes of the observed departure of employment path from the GDP movements occurred in US in the late of 2008 onwards. Starting from a production function approach, and assuming that the TFP growth is explained by variables linked to the business cycle, we are able to formulate an extended version of Okun’s law based on cyclical factors. Out-of-sample forecasting for the period 2008 onward shows that predicted US employment is on average 1.7% above the observed one, meaning that this gap cannot be attributed to identified cyclical factors.

Keywords: Okun’s law; Employment recovery; Cointegration; Structural and cyclical factors (search for similar items in EconPapers)
JEL-codes: J21 E32 C40 (search for similar items in EconPapers)
Date: 2014
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