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International Monetary Fund
This Selected Issues paper for the United States discusses the microeconomics of the country—household wealth and savings. Households’ consumption-saving decisions have an important bearing on the U.S. economic outlook. This paper demonstrates how households with consistently lower income, which have shown growth in the years prior to the crisis, experienced larger declines in their saving rates and a larger rise in their indebtedness before the crisis, contributing significantly to the dynamics of the mean saving rate.
Mrs. Nujin Suphaphiphat and Hiroaki Miyamoto

developments over the 2000–18 period in European countries with a focus on LTU. Section III describes the empirical methodology. Section IV presents main findings. Section V discusses the potential drivers of the LTU, their developments in Europe, and policy implications. Finally, Section VI concludes. Section II: Long-Term Unemployment in Europe 9. LTU is typically measured by two indicators: the LTU rate and incidence of LTU . The LTU rate measures a share of the long-term unemployed to the total labor force, while the incidence of LTU measures a share of the

Mrs. Nujin Suphaphiphat and Hiroaki Miyamoto
While unemployment rates in Europe declined after the global financial crisis until 2018/19, the incidence of long-term unemployment, the share of people who have been unemployed for more than one year to the total unemployed, remained high. Moreover, the COVID-19 pandemic could aggravate the long-term unemployment. This paper explores factors associated with long-term unemployment in European countries, using panel of 25 European countries over the period 2000–18. We find that skill mismatches, labor market matching efficiency, and labor market policies are associated with the incidence of long-term unemployment. Among different types of active labor market policies, training and start-up incentives are found to be effective in reducing long-term unemployment.
International Monetary Fund

novel and worrisome feature of the post-recession U.S. labor market has been the emergence of a large and persistent pool of long-term unemployed . During the postwar period, the U.S. labor market had never experienced large and persistent long-term unemployment (LTU), in contrast to several European countries. 2 3 This changed with the 2008–09 recession. The LTU rate increased from 0.7 percent in early 2007 to 4.5 percent in early 2010—almost double the previous historical peak—and has been unusually persistent since then ( Figure 1 ). 4 In contrast, movements