NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Unemployment: Getting the Questions Right - and some of the answers

Olivier Jean Blanchard

NBER Working Paper No. 2698
Issued in September 1988
NBER Program(s):   EFG   ITI   IFM

This paper analyzes the issue of persistent high unemployment. It focuses on two channels of persistence. The first is capital accumulation. The paper analyzes investment decisions under imperfect competition, focusing in particular on the effects of demand and cost shocks on investment, capital composition and bankruptcies, and their effect on employment and unemployment. The second is labor supply. The paper analyzes the various channels through which the unemployed may become disenfranchised, leading to higher equilibrium unemployment. In both cases, it briefly reviews and assesses the available empirical evidence. It ends by drawing several implications.

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Document Object Identifier (DOI): 10.3386/w2698

Published: Europes Unemployment Problem, eds. Charles Bean and Jacques Dreze, MIT Press: 1991 pp. 66-89

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