Introduction: The Labor Market in the Aftermath of the Great Recession

The recession of 2008–9 was the deepest and longest downturn in US economic activity since the Great Depression. Like the historic episode of the 1930s, the Great Recession had a particularly large impact on labor markets. Unemployment peaked at 10% in 2009 and only fell back below 6% in 2014 ðfig. 1Þ. The impact on employment rates was even greater: the fraction of the working-age population with a job fell precipitously in 2008 and 2009 ðfig. 2Þ and has as yet only recovered a small fraction of these losses. Most economists believe that the Great Recession was caused by financial market stresses following the collapse of the housing bubble. Nevertheless, some have argued that labor market factors contributed to the persistence of the recession. Average real wages rose in the early stages of the recession and then remained relatively stable ðsee fig. 3Þ, suggesting that realwage rigidities—perhaps reinforced by the availability of extended unemployment insurance benefits—may have been impeding labor market adjustments. The unprecedented rise in long-term unemployment, which by 2011 accounted for nearly one-half of all unemployment spells, has likewise been interpreted by some analysts as evidence that benefit-induced frictions were slowing recovery from the recession. In 2011, the National Bureau of Economic Research asked the Alfred P. Sloan Foundation to sponsor a series of studies on the labor market impacts of the Great Recession. The papers in this issue, all of which have been through the Journal of Labor Economics’ usual refereeing process, are the end result of this process. They offer new perspectives on three fun