The global recession is likely to results in higher structural unemployment for some time in many OECD countries. This paper assesses how the shock to aggregate unemployment as a result of the economic crisis may be transmitted to structural unemployment through hysteresis effects that occur through the rise in long-term unemployment. The estimated increase in structural unemployment due to the crisis is estimated at ¾ percentage point in the OECD as a whole, but the paper highlights wide cross-country differences with the largest increases expected in those European countries where unemployment is increasing most and where institutional settings remain less favorable than elsewhere, notably Spain and Ireland.
