DENVER – Higher unemployment may be here to stay even after the economy recovers, Michael Spence, Dean Emeritus of the Stanford Graduate School of Business, told the annual meeting of the National Association for Business Economics.
The labor market is global, but most workers aren’t, Spence, a winner of the Nobel Prize in Economics, told the meeting held in Denver.
“My main concern about the American economy now is I think we’re underestimating the extent that to which we have a deeper structural problem,” he said. “We have limited labor mobility. I don’t know if we’ll need a German-style restructuring of the labor markets with lower wage expectations.”
Spence said large developing countries — especially China, India and Brazil — have rebounded more sharply than the U.S. because they weren’t as leveraged with debt and their political and business leaders have learned from past crises. The growth looks sustainable, as long as the U.S. doesn’t enter into another downturn, he said.
His remarks were reported by Greg Griffin of the Denver Post.
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