Ronan Lyons | Personal Website
Ronan Lyons | Personal Website

Long-term unemployment must rise to top of the agenda in 2010

  • Kevin Denny ,

    For those of us who remembered the 80s, the rise in long term unemployment is eerily familiar. One thing to bear in mind is the implications for the Phillips Curve. Recall the basic argument is that unemployment should help keep the labour market in check and not let wages run away with themselves. The evidence is, as I recall, that long term unemployment is less effective at doing this. People in long term unemployment get used to it & search less hard and/or are viewed as unemployable by firms. So basically you are heading towards hysteresis: if you don’t correct the temporary shock quickly enough then its effects can become permanent and you may get the “lost generation”.

    • Stephen Kinsella ,

      @ Ronan and @ Kevin,

      Of course, there is always the safety valve of emigration, which may lose us the generation more quickly than a drift into LT unemployment.

      • kevin denny ,

        @Stephen Interesting: from a labour market point of view, emigrants provide even less downward pressure on wages (bad), but are not unemployed (good) but of course its a loss of resources.

        • Joseph ,

          I couldn’t agree more with you Ronan but will they make it a priority? Will they actually do anything about it at all let alone make it a priority? I fear that if they don’t (and I have grave doubts) then Ireland will simply be rotting from the inside out. I certainly don’t see any evidence of the present government putting proposals, plans, strategies, etc. on the table.

          • Pete Murphy ,

            Unemployment, both in the U.S. and the world as a whole, marches ever higher because the field of economics doesn’t account for the relationship between population density and per capita consumption.

            Following the beating the field of economics took over the seeming failure of Malthus’ theory, economists adamantly refuse to ever again consider the effects of population growth. If they did, they might come to understand that once an optimum population density is breached, further over-crowding begins to erode per capita consumption and, consequently, per capita employment.

            And these effects of an excessive population density are actually imported when a nation like the U.S. attempts to trade freely with other nations much more densely populated – nations like China, Japan, Germany, Korea and a host of others. The result is an automatic trade deficit and loss of jobs – tantamount to economic suicide.

            Using 2006 data, an in-depth analysis reveals that, of our top twenty per capita trade deficits in manufactured goods (the trade deficit divided by the population of the country in question), eighteen are with nations much more densely populated than our own. Even more revealing, if the nations of the world are divided equally around the median population density, the U.S. had a trade surplus in manufactured goods of $17 billion with the half of nations below the median population density. With the half above the median, we had a $480 billion deficit!

            If you‘re interested in learning more about this important new economic theory, then I invite you to visit my web site at

            Pete Murphy
            Author, “Five Short Blasts”

            • Brian J Goggin ,

              “… economists adamantly refuse to ever again consider the effects of population growth.”

              Google Scholar finds 536,000 documents with “economics” and “population growth”.

              But I cannot confirm that they were written by economists.


              • Halfaloaf ,

                We also need to kill the apathy that is in the country.
                The business community has the bunker mentally and the unemployed those over 6 months seem to simply accept where they are.
                The politicans live in a bubble so I would have to agree with Joseph in relation to the country rotting from the inside out

                • Ronan Lyons ,

                  Thanks for the comment Tom, and great to see still going strong.
                  I would agree with both yourself and Joseph – we don’t need the government trying to do everything. It should think of itself as the referee, making the conditions right for domestic and foreign business to employ people, rather than the manager, trying to be all things to all men. After all, the government is unlikely to be able to second-guess the world economy.

                  • Senan ,

                    As now seems likely, when European interest rates begin to rise later in 2010, then many newly unemployed ‘professionals’ and even employed professionals are going to get a shock.

                    Already I hear reports of some banks considering further (on the back of those in 2009) variable rate increases soon. Families that have relied on a certain level of income and now have unemployment to deal with, will hit problems.

                    Although the government are currently concentrating on stabilisation, I’m sure they must have some form of plan to tackle this. Even from a self-serving point of view; employment required for tax revenue, and required to keep voters happy.

                    • subhodeep banerjee ,

                      unemployment is a universal problem and it should be tackle by the UN, not by a single country it is managed.

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