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Jobless recovery as consequence for structural changes.

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Jobless recovery as consequence for structural changes Submitted to Prof. Dr. Kurt Scharnbacher University of Applied Science in Mainz by Ina Lack Kastanienweg 8 65451 Kelsterbach Tel. (0 61 07) 99 05 12 Table of Contents 1. Introduction 1 2. Analysis 1 2.1. GDP growth as indicator for recovery 1 2.2. Poor development in Employment 2 3. The Role of structural change 3 4. Conclusion 5 Figure List Page Figure 1 GDP Growth 1 Figure 2 Unemployment Rate 2 Figure 3 Job Growth during Recoveries 3 Figure 4 Contribution of the Temporary Layoffs to the Unemployment Rate 3 1. Introduction "US recovery may not equate to job creation" was the big heading in the markets part of the Financial Time at the beginning of October 2003. The sentence seems to be confused in itself. "Job growth was traditionally the strongest evidence of economic expansion..".1 How can there be a recovery without a growth in jobs? This essay is going to examine the hypothesis that economic recovery is possible without job creation. And if so that this situation no longer is a exception but rather a consequence of structural changes. First the GDP growth is examined to be sure that there is a improvement from the recession in November 2001 and that the recovery has really started yet. ...read more.


Even worse the job numbers are still falling . The unemployment rate calculated as: where gt is the growth rate in period t, x is the variable being examind (e.g. umemployment figures) and n is the time period of interest has been at or above 6.0% since April and above 5.6% since the recovery commenced in November 2001. An absence of job growth has been a feature of the current cycle. Chart 1 compares payroll growth or lack of it in the current recovery with both the average from previous cycles (1945 -1990) and the 'jobless' recovery in the early 1990's. To index numerical data, values must be adjusted so they are equal to each other in a given starting time period. By convention, this value is usually 100 where is the raw data value in a given time period from t = months of recovery is the data value in the initial time period, and is the new indexed value of the variable. After this calculations the result shown in the graph tells that the decline in payroll job growth of 2001 and 1991 during the recession was higher than the average of the last recessions. But whereas in 1991-92, jobs started picking up substantially 17 months after the trough, the US is currently into the 23rd month of recovery and have yet to see any hard evidence of significant improvement.4 3. ...read more.


Not to mention the lower labor costs 4. Conclusion The time after the 2001 recession can be described as a jobless recovery. The development of GDP and jobs is conflicting. During the GDP growth, employment figures decline.This can cleary be seen in Appendix 3. After the analysis of the economic situation of the US it is obvious that the situation can be described as a "jobless recovery". Structural changes play an important role in the current labor market slump. Industries that lost jobs duing the recession have continued to shrink during the recovery and permanent job losses hav eclipsed temporary layoffs. Conservatives say that more growth is needed to stimulate jobs, and that requires tax cuts and fewer regulatory barriers to business.6 For a sustainable recovery in the labor market, economic growth will need to be above 3.0% due to productivity growth and trends in labor force growth. But there are some signs that a stronger recovery may lie ahead as growth in the second quarter was carried by a variety of factors: a lift in consumption, increases in investment, a strong residential housing market, and more spending by the federal government. In comparison, though, the trade deficit remains the trouble spot of the economy, growing to a new record high The goal is reached with a annual growth of 3.3 per cent and a new peak of 7.2 per cent. So the future will show if these analysts calculate right. ...read more.

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