Lee Ohanian on the Great Recession and the Labor Market

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🗓️ 20 August 2012

⏱️ 74 minutes

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Summary

Lee Ohanian of UCLA talks with EconTalk host Russ Roberts about the recession, the recovery, and the state of labor market. Ohanian describes the unusual aspects of this recession and recovery in the United States as shown by the labor market and the unusual performance of hours worked, productivity, and wages. He also discusses the behavior of business investment and speculates as to why this recession and the recovery has been so different in the United States. The conversation closes with a discussion of the role of the foreclosure process in encouraging unemployment.

Transcript

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0:00.0	Welcome to Econ Talk, part of the Library of Economics and Liberty. I'm your host Russ Roberts
0:13.9	of George Mason University and Stanford University's Hoover Institution. Our website is econtalk.org
0:21.2	where you can subscribe, find other episodes, comment on this podcast, and find links to
0:26.5	another information related to today's conversation. Our email address is mail at econtalk.org. We'd
0:33.6	love to hear from you. Today is August 8, 2012 and my guest is Leo Hanian, Professor of Economics
0:44.0	at UCLA, Lee Welcome to Econ Talk. Thanks Russ. So we're going to talk about the state of the
0:48.2	economy and we're going to draw on a paper you wrote in 2010 in the Journal of Economic
0:52.4	Perspectives and that was the economic crisis from a neoclassical perspective. We'll put a link
0:58.3	up to that. And we're also going to hope get to some current work you're doing on the housing
1:01.6	market and the relationship between unemployment and the foreclosure issue. And along the way I
1:07.6	suspect will end up dipping into your work on the Great Depression as well. I want to start by
1:12.3	asking you what is different about this recession relative to previous post-war recessions in the
1:19.4	United States. What's strikingly different? Okay. Yeah. I mean, there's there's several features of
1:23.9	this particular episode that contrast sharply. You know, changes both in terms of the downturn
1:30.8	up to the trough and then also about the recovery. So in terms of the downturn, it's a very severe
1:35.9	recession, you know, kind of comparable to the 8182 recession in which unemployment went up to
1:40.8	nearly 11%. You know, what's really different about this recession compared to 8182 or other
1:48.0	severe recessions such as those in the 70s is that there's no really there's really no productivity
1:53.8	to climb. So typically in US business cycles productivity measured either as total factor productivity
2:00.0	or labor productivity output per hour. Output per hour. Yeah. Either output per hour or output per
2:05.5	worker. Typically productivity falls significantly during substantial recessions such as those in the
2:11.5	70s and the 8182 recession. In this recession, productivity didn't fall. All the drop in output
	...

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