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"An important need to restructure"

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It is clear that in an economy with an important need to restructure and hire workers in new sectors, unemployment is the result of the positive match surpluses that result from appropriability. . . . Thus, unemployment is an equilibrium response of the economic system, and it serves to restrain the bargaining position of workers in the presence of appropriability. This preserves the profitability of investment. . . . Periods of adjustment and intense gross hiring require high transitional unemployment to prevent surges in shadow wages. Unemployment keeps shadow wages at a level that makes job creation pay off.

This is from page 212 of Ricardo Caballero's Specificity and the Macroeconomics of Restructuring (2007), which I have found very useful. Here are charts of gross output and employment by sector in the vicinity of the Great Recession (click for larger images):




I'm just thinking; I don't have anything else to say about these right now.


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