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"And when unemployment fell from 2009 to 2012, those same industries accounted for the majority of the change."

But unemployment did not fall back to where it was, right? And GDP, even though growing again, is far below the previous trend line. There IS a structural problem, namely, that the structure of production was distorted by interventionism, particularly credit expansion. Once the structure of production is distorted, output almost certainly must fall, at least below what it otherwise would have been. This could translate into reduced wages or reduced employment, depending on the specifics, particularly on continued intervention that may tilt the incentives toward reduced employment. What matters is that the structure of production be repaired, and this can only happen through the efforts of entrepreneurs operating in a market where price signals are not distorted. So what if unemployment went up mainly in some industries and then came part of the way back down mainly in those same industries?

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The two aren't necessarily mutually exclusive. Changes in aggregate demand can be associated with the progress of structural adjustment, in that "inadequate" aggregate demand usually coincides with slow progress in resource reallocation. Likewise, faster reallocation means higher aggregate demand, since more firms are partaking in the process by investing. I expand upon this point here: "Structural Misunderstanding."

"Lazear asserts (correctly in my view) that such fundamental phenomena could not have changed that quickly."

Whether or not it did, it is simply not true that it could not have changed that quickly. The punctuated equilibrium model explains how exactly these kinds of rapid changes occur. And it is possible that labor could have gone from an equilibrium around 4-5% unemployment and then jumped to one 8-9%.

Again, this is not to say that this is in fact what has happened, but we do have the models that would explain how such a sudden change would be possible.

I take Peter as being most concerned with the meaning of "structural." A structural change could result in a rise in the natural rate of unemployment. That increase is not the structural change, but it's consequence.

The claim that a structural change has caused the natural rate to rise dramatically in a few years is, in my opinion, more based in politics than economics. If such a change occurred, then the president and the Fed are exculpated from responsibility for persistently high unemploymet. Pardon me if I reject that thesis.

The distinction used to be made between secular (permanent or changes in trend) changes and cyclical (temporary or self-reversing changes). They are not so easily disentanged. This is a literature on why cyclical downturns result in permat changes. One wonders if, in retrospect, this will be an element of the explanation of the persistence of high unemployment.

Reports indicate that productivity increases are responsible for some of the unemployment. I would say that is a structural change.

Of course, productivity increases are good in the long run, but it may take a while for the increased welfare to show up in jobs.

I think what Jerry said is exactly right. The persistence in high unemployment has taken many by surprise (though many also predicted it - many Austrians included). But, after the fact, the surprised are going to resort to "structural" explanations.

The rise in productivity is, at least in part, a statistical artifact. Fewer workers has resulted in higher measured output per worker. Also, it is the result and not the cause. Productivity always rises in recessions, statistically, and because businesses economize on labor.

Troy, when I say that the NR could not have changed that quickly I am talking empirically-historically, not as a general proposition.

"Second, if, as Lazear asserts, there is no 'structural' distortion, what explains the cycle? What explains the lack of growth? And why so precipitous? He says, 'All we need to do is grow the economy. Unfortunately, current policies aren’t doing that.' So do we learn much from this editorial unless we know what those policies are and what they ought to be?"
I find Lazear to be question-begging here. He rejects structural problems in the economy and suggests all we have to do is "grow the economy." However, how can we possibly grow the economy if we do not know what is wrong with it?

Surely there must be something more wrong with the economy than simply a lack of technocratic will to grow it.

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