Evidence of structural unemployment dissolves, it would appear, with the recovery of aggregate demand. This suggests that present-day evidence of structural unemployment will similarly dissolve in the face of economic growth.Figure 7 shows the analogous mismatch index for the United States, constructed from data from Table Ba814-840 of Historical Statistics of the United States. Again, the pattern is strongly procyclical. Compared to the United Kingdom, the peak in the 1930s is later, reflecting the fact that the first full year of recovery is 1934. Once again, however, evidence of persistent structural unemployment dissolves in the face of economic recovery.Figure 7.Measure of mismatch or turbulence for the United States.Note: The mismatch (M) is calculated as the sum of the (absolute) changes in the percentage share of total employment for all industries.M = iei, where ei is the percentage share of total employment in industry iSource: Historical Statistics of the United States: Millennium Edition online, Table Ba814-830.Full figure and legend (19K)Then there are worries about hysteresis due to the concentration of joblessness among a hard core of long-term unemployed. There is some evidence that unemployment in the current cycle is concentrated among a hard core of long-term unemployed to a greater extent than in the preceding recessions.24 The same was true of the 1930s. Woytinksy (1942) describes the US unemployed as subject to two very different patterns, pointing to the existence of two contrasting groups among the unemployed: persons who have a fair chance of reemployment in the near future, and those who remain out of jobs for considerable periods of time.25 Jensen (1989) estimates that structural and hard core unemployment accounted for fully half of US unemployment in 1935 and an even higher fraction of the total in subsequent years.26 Crafts (1987) similarly documents the exceptionally high incidence of long-term unemployment in 1930s Britain.The pernicious effects of long-term unemployment are well known. Skills acquired on the job atrophy when off it. Individuals experiencing long-term unemployment tend to become demoralized and apathetic.27 An influential 1933 study by Paul Lazarsfeld and associates of the Austrian town of Marienthal painted this picture in detail, as did a 1938 study of England by the Pilgrim Trust.28 Crafts (1987) cites commentary from the 1930s to this effect for the United Kingdom from both private commentators and policy authorities.29The long-term unemployed may also become stigmatized in the eyes of employers. Jensen (1989, p. 556) writes of the long-term unemployed in the United States and United Kingdom in the 1930s that (e)mployers distrusted their job qualifications; they would not hire them for any reason at any wage. This problem particularly afflicted older workers: Some entry into the hard core resulted ... when middle-aged workers became, at age 45 or 50, too old .Together, these mechanisms imply a decline in the efficiency of labor utilization and in growth capacity, underscoring the damage to growth potential from long-term unemployment.Top of pageTECHNOLOGICAL PROGRESSAnother worry is that technological progress may slow as a result of the crisis. Research and development, especially by small firms and startups, is sensitive to the availability of bank funding,