Photo: Jonathan Ernst / Reuters
The authors of the study, conducted by Bloomberg Economics, came to the conclusion that the current high level of unemployment in the US may persist for a long time and in some sense become “eternal”. The reason they are called “shock redistribution” — a phenomenon in which in some sectors new jobs, while, in others their number is reduced. The problem lies in the fact that new places are created slower than the old shrink.
The authors believe that to reduce unemployment from the current high rates will fail, even at the expense of large-scale incentive programs: monetary in the performance of the Federal reserve system (FRS), conducting an unprecedented amount of quantitative easing (purchase of securities from banks), and fiscal performance of the government allocating allowances and soft loans to needy residents and businesses.
Thanks to these efforts in the medium term, perhaps a sharp recovery in the national labour market, but it will likely not last long, the study says. In recent weeks in the United States, a decrease in the number of new applications for unemployment benefits compared to the record spring level. However, this does not mean that dismissal ended — on the contrary, now under reducing fall senior members who have savings and do not need to apply for benefits. This happens on the background of the opening of many companies and entire industries.
“Shock redistribution” became the reason for about 30 percent of layoffs in recent months, estimated by the authors to Bloomberg. Another 50 percent were in the consequences of blocking of the economy, responsible for 20 percent of layoffs were high unemployment benefits which unemployed citizens lose incentives to search for new.
In this situation, the government will have to develop new, more flexible approach to supporting the economy, according to the study. It should be based on the allocation of aid only to those companies that normally would show good financial results. Non-viable enterprises, on the contrary, should not count on support from the state.
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