Jobs. Jobs. Jobs. Getting the Labor Markets Working Again

Olivier Blanchard

November 7, 2012

The sharp and persistent rise in unemployment in advanced economies since the 2008-09 financial crisis is a hotly debated policy issue.  Rightly so:  High persistent unemployment has major human and economic costs, from loss of morale to loss of skills.  More broadly, it seems to undermine the very fabric of society.

Against this backdrop, the theme for the IMF's 13th Jacques Polak Annual Research Conference, “Labor Markets through the Lens of the Great Recession,” could not be timelier. This year’s conference program weaves together a number of contributions by researchers both inside and outside the IMF, aiming to shed light on those labor market issues that are central to the current economic and social landscape.

Cyclical vs. structural

Peter Diamond, Nobel Prize winner in Economics and Professor of Economics at MIT, will give the keynote Mundell-Fleming lecture on the controversial issue of cyclical vs. structural unemployment.

Peter will explore whether and how we can use the information contained in two widely used tools, the Beveridge curve relation between unemployment and vacancies, and the matching function, which relates hires, unemployment, and vacancies.   His contribution will help us understand both the usefulness but also the limits of these tools, and give clear indications on how we should extend our research in the future.

The remainder of the program consists of 12 papers on key dimensions of labor markets and income distribution, and on the role of trade and financial globalization in labor market outcomes around the globe.

Just to give you a flavor of what to expect, here are some of the questions that we will be discussing:

In addition to the Mundell-Flemming lecture, the conference will feature two other events. George Akerlof – Nobel Prize winner in Economics and Senior Advisor in the IMF Research Department– will deliver the opening remarks to the conference, sharing his views on the nature of unemployment and main trade-offs in job creation policies.

The conference will conclude with an Economic Forum on “Policies and Jobs.”  A panel of experts,  Ricardo Hausmann (Harvard University and former finance minister of Venezuela), Adriana Kugler (chief economist of the U.S. Department of Labor), Lawrence Katz (Harvard University), and Martin Rama (head of the World Bank 2013 WDI report on jobs), will discuss current labor market policy choices  both in advanced and in emerging countries.

As in the past, we hope that research presented at this conference will contribute to new policy thinking here at the IMF and elsewhere, and that you can find time to read the papers posted online, and via the broadcast of the Economic Forum at www.imf.org or by commenting here.

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