Re: Hipothesis: economic growth may initially cause increase in unemployment

From: zerge (zerge_at_hotmail.com)
Date: 09/24/04 

Date: 24 Sep 2004 11:59:25 -0700

negloid@hotmail.com (Mark Neglay) wrote in message news:<d36d7e45.0409240255.51c39714@posting.google.com>...
> zerge@hotmail.com (zerge) wrote in message news:<f0a1621c.0409231113.22a56991@posting.google.com>...
> > As an economy starts to grow
> >
> > a) Productivity increases, thus a % of people get fired and it takes a
> > while before they get picked up by other employers
> > b) People start to earn more and therefore to save more. This allows
> > workers to afford a longer period between jobs to find something
> > better paying instead of taking whatever job they can take
> >
> > This implies that, at least initially, and maybe even permanently,
> > unemployment figures may rise as an economy grows.
> >
> > Does anybody know if this hypothesis fits the statistics? Any formal
> > theories on the subject out there?
>
> I think the general concensus is that unemployment grows for a short
> period when an economy turns around because people who had dropped out
> of the labor market re-enter it. I don't see the logic behind "a".

That makes sense, thanks.
As to "a", if, say, factories automate processes with new technology,
they initially let workers go. Those workers take a while to find new
jobs.

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