Women have been the big winners from the boom. But they will lose out most in the bust
by Tim Leunig / March 1, 2009 / Leave a commentPublished in March 2009 issue of Prospect Magazine
Recessions are always painful for those who lose their jobs. For most, life goes on sooner or later: the economy recovers and they get a job similar to the one that they had held before. But for others life does not go back to normal. Their job turns
out to be gone for good. Skills and experience that were once valuable are no longer, and if they get another job it is not as good. Think of the former steel workers stripping in The Full Monty. Economists call this “hysteresis”: it means that a recession can be more than a cyclical phenomenon, and have long-lasting effects.
This happened in the early 1980s, when the recession increased the number of industrial workers losing their jobs so much that the economy could not generate enough new jobs for all of them.
At first sight, the threat of hysteresis looks smaller this time. Although finance is under pressure at the moment, there is no reason to think that it is in permanent decline. In any case, although it generates a big proportion of GDP, finance’s share of employment is relatively low: less than 10 per cent of the total workforce. And most people in finance are well-educated, and likely to be able to find other work.
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