TY  - JOUR
AU  - Herkenhoff,Kyle F.
AU  - Ohanian,Lee E.
TI  - Labor Market Dysfunction During the Great Recession
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 17313
PY  - 2011
Y2  - August 2011
UR  - http://www.nber.org/papers/w17313
L1  - http://www.nber.org/papers/w17313.pdf
N1  - Author contact info:
Kyle F. Herkenhoff
550 Landfair Ave Apt. 3
Los Angeles, CA 90024
E-Mail: kyle.herkenhoff@gmail.com

Lee E. Ohanian
8283 Bunche Hall
UCLA, Department of Economics
Box 951477
Los Angeles, CA  90095
Tel: 310/825-0979
Fax: 310/825-9528
E-Mail: ohanian@econ.ucla.edu
AB  - This paper documents the abnormally slow recovery in the labor market during the Great Recession, and analyzes how mortgage modification policies contributed to delayed recovery. By making modifications means-tested by reducing mortgage payments based on a borrower's current income, these programs change the incentive for households to relocate from a relatively poor labor market to a better labor market. We find that modifications raise the unemployment rate by about 0.5 percentage points, and reduce output by about 1 percent, reflecting both lower employment and lower productivity, which is the result of individuals losing skills as unemployment duration is longer.
ER  -