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The Rising Strength of Management, High Unemployment and Slow Growth: Revisiting Okunís Law (Thomas Weisskopf Festschrift Conference Paper)
Michael Reich | 11/27/2012
Abstract:
Michael Reich argues that the rising strength of management in recent decades may help explain why the United States economy has experienced three jobless recoveries in a row, and in particular, why unemployment rate has remained stuck so high four years after the onset of the Great Recession. Reich draws on Okunís law, the widely-used tool for analyzing the relationship between changes in GDP growth and the unemployment rate.  He finds, surprisingly that, since the 1980s, the Okunís law relationship has not changed significantly within each business cycle recession and recovery. But Reich argues that, over the longer-term,  management in the U.S. has increasingly exercised its power to impose layoffs and long-term cuts in the labor force over the past 30 years.  He argues that that this long-term restructuring, from one full business cycle to the next may help explain the jobless recoveries that have occurred since the 1980s. 
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