On This PageMarch 1996, No. 103

Unemployment Duration and Labor Market Tightness
Last Updated: 02/15/96

Since the last recession, average unemployment durations have been surprisingly high given levels of other labor market indicators. Recently, some have pointed to this as evidence that there is more labor market slack than is commonly believed. Their argument is that the long-term unemployed are willing to accept almost any job, even jobs with reduced wages. Thus, though there currently are relatively few unemployed workers, enough of them are sufficiently desperate that wage pressures are minimal. (A possible corollary is that inflation concerns have been exaggerated and monetary policy has been overly restrictive.)