Hello everybody, I have an article that explains why since 2000: business investment has been weak; the fall in the U.S net labor share; the decline in the prime age U.S labor participation rate vs large gains elsewhere; the rise in deaths of despair. The article is called Skill Stalagmites, Technology Stalactites and can be found here. I have split the piece into two parts: a 1500 word article for the general reader and a longer piece for the more sophisticated reader. There is a link to the latter at the end of the first piece.

The punchline to the article is that the 4-5% gap in the lfpr between the U.S and peer economies is a form of disguised unemployment. And this is a novel kind of unemployment, which is not caused by a fall in aggregate demand.

The actual cause is that firms are imposing higher effort levels on workers. I can summarize the argument you will find in the main article; it goes like this:

Firms impose higher effort demands on workers; workers have to complete more tasks (for a higher wage) or be fired.
The higher wage does not compensate workers for their lost work leisure; thus workers look for less demanding job positions (or refuse to move up to more senior roles).
If one imagines a skill ladder, then all workers attempt to drop down a rung. This is easy for higher skilled workers, but what happens to workers at the bottom?
The lowest skilled workers compete for job openings with somewhat more skilled workers. Firms prefer to hire the more skilled worker, resulting in the lowest skilled workers being pushed out of employment altogether.
This assumes that employers can always identify the highest skilled worker from their pool of applicants. This won't always be the case; if the higher skilled worker has a bad interview or the weaker candidate has positive chemistry with the interviewer, then the objectively weaker candidate can win a job offer.
Thus provided the lowest skill workers are willing to keep searching for jobs they will eventually obtain a job offer and regain employment.
This means though that workers on the second lowest skill rung will be unable to drop down to the lowest rung unless they also increase their job search activity. And in turn this forces the workers above them to increase their job search.
Any person wanting a job now has to apply to many more job positions before they can get their first job offer.

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