reason why investment cannot again recover to pre-crisis levels.Top of pageSTRUCTURAL UNEMPLOYMENTAnother worry is that a rise in structural unemployment will reduce labor input and efficiency. It is harder to grow when you have to retrain construction workers and hedge fund managers to work as welders and nurses, as will be the case when the economy is undergoing structural change including when it is rebalancing away from unsustainable activities that boomed before the crisis. The mismatch between skills supplied and demanded will then constrain the growth of employment. Firms may not be able to find workers with the requisite training and experience. One currently hears complaints from manufacturing firms of a shortage of, inter alia, machinists see Bowers (2010). Similarly, workers lacking the skills and experience demanded may find it more difficult to find their way out of a crisis. The outward shift in the Beveridge Curve starting in 2009 Q2 (Federal Reserve Bank of Atlanta, 2010) is at least superficially consistent with this view.19 More generally, there is evidence that unemployment is concentrated to an unusual extent in the current recession among individuals previously with long-term jobs who are now faced with the challenge of finding new jobs in different sectors.Similar complaints about shortages of qualified machine-shop and tool-room workers were voiced in the midst of high unemployment in the 1930s (Allen and Thomas, 1939). Motor vehicle manufacturers in Oxfordshire complained that Welsh coalminers lacked both the skills and attitudes required of productive factory workers (Heim, 1983). Regional labor market problems and geographical disparities are similarly evident in the recent recession, accentuated by housing market declines which leave homeowners with negative equity hesitant to sell and by exceptional distress in traditionally vibrant areas like California and Florida which have traditionally absorbed workers from declining regions.20 More generally, mismatch is a theme in studies of the British labor markets in the 1930s (see for example, Booth and Glynn, 1975). Dimsdale et al. (1989) develop an empirical measure of the extent of mismatch in interwar Britain, summing the absolute value of the change in the shares of total employment across 27 industries.21 They show that a high level of mismatch moderates the downward pressure on real wages normally exerted by a rise in the number of unemployed workers, in turn limiting employment and output growth in their model.22Figure 6 displays their mismatch index (the sum of absolute changes in the shares of total employment across 27 industries as described in the previous paragraph). Not surprisingly, it is procyclical, rising with the onset of the slump in the early 1930s, falling when recovery commences in 1932, and then rising again sharply with the 19371938 slowdown. With capital goods industries hit especially hard in the slump, it is not surprising that the dispersion of employment growth rates moved so strongly with the cycle.23Figure 6.Measure of mismatch or turbulence for the United Kingdom. Source: British Labour Statistics, Historical Abstract 18861968, Table 114Full figure and legend (19K)But the other striking feature of the figure is that the mismatch index falls quickly and sharply with recovery after 1931.