By Brai Odion-Esene

BOSTON (MNI) – U.S. policymakers continue to be frustrated by a
stubbornly high unemployment, with over 6 million Americans without a
job for 27 weeks or more, and two economists Tuesday highlighted the
significant challenges in particular for older workers displaced by the
“Great Recession.”

Older workers are at “relatively high risk” for prolonged spells of
unemployment and premature retirement, Boston Federal Reserve Economist
Robert Triest and Northeastern University economist William Dickens said
in a research paper they present at the Boston Fed’s economic
conference.

They warned that the Great Recession appears to be having an impact
on the jobs market in the U.S. that will likely persist even after
economic activity has recovered.

In particular, “The relatively low probabilities of reemployment
and relatively high probabilities of leaving the labor force for older
workers is cause for concern,” they said.

The paper added that, conditional on previous job tenure, older
workers are significantly more likely that young workers to remain
unemployed. “Although the human capital specificity associated with
losing a long-term job does not appear to be an impediment to job
matching, age does appear to be an impediment,” the authors wrote.

They noted that older workers are not only significantly more
likely than younger workers to be unemployed, but they are also
significantly more likely than middle aged workers to drop out of the
labor force after leaving their jobs voluntarily and involuntarily.

“To the extent that displacement of long-tenure workers results in
long-term consequences for these workers, the Great Recession will have
a long-term impact through the increase in the number of long-tenure job
matches that were destroyed,” they said.

“And once reemployed, they will be at higher risk of future job
loss because they will have lost the protection afforded by job tenure.”

The authors also said it seems likely that the United States will
undergo some structural transformation, with both the construction and
financial sectors predicted to contract from their pre-recession sizes.

“To the extent that it takes a long time to move from one type of
employment to another, structural shifts could cause extended increases
in the equilibrium level of unemployment,” Dickens and Triest said.

They also noted the significant the struggling housing market is
having on the unemployment rate, noting that with the large number of
U.S. housing inventory underwater, and the recent tightening of mortgage
loan standards, high rates of owner occupancy is the U.S. is now making
the reallocation of labor “substantially more difficult.”

They went on to warn that if the housing market’s woes continue as
the economy picks up, “it is possible that housing market problems could
cause problems in the future.”

** Market News International **

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