unemployment, several European economies display highly persistent unemployment dynamics. The theory of hysteresis challenges this …Despite conventional macroeconomic theory is based on the idea that demand shocks can only have temporary effects on … strong empirical evidence of unemployment hysteresis in advanced economies since the 1990s. Relying on an identification …

, recessions generate long-lasting hysteresis: persistent decreases in the employment-to-population ratio and earnings per capita …. Changes in the composition of workers explain less than half of local hysteresis. We further show that finite sample bias in … hysteresis in employment rates. …