Why does unemployment fall rapidly after recessions in the United States? Will this again be the case after the COVID crisis?
The unemployment rate falls much faster after a recession in the United States than in the euro zone. This can probably be explained by: The flexibility of the US labour market , which leads the unemployment rate to rise sharply in recessions and makes US companies unafraid to hir e ; The greater flexibility of wages in the United States, which allows profit margins to recover faster than in the euro zone. This leads to different cyclical profiles in the United States and the euro zone. With this again be the case after the COVID crisis?
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