A recession causes a corresponding drop in demand for goods and services. In such a cyclical downturn, policymakers can help by replacing the lost demand. But if the changes are structural, such as when unemployment is due to skill mismatches, technological advances, or changes in what people purchase that require resources to be reallocated, policymakers are far less able to help.
So an important question is whether the labor market is being hampered by demand-side cyclical problems, or supply-side structural issues....
The main takeaway is that contrary to speculation about technological change and part-time work, most of the variation is part-time employment appears to be cyclical rather than structural.
That's good news: it means policymakers, if they choose to, could use fiscal as well as monetary policy to bolster the recovery of the labor market.Market Watch
What is driving changes in the job market?
Mark Thoma | Professor of Economics, University of Oregon Eugene
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