Adjusting to economic shocks tougher than thought (Mark Muro, Brookings)

The mathematical models of economic theory have always sacrificed a bit of on-the-ground accuracy for what has been assumed to be a larger measure of insight. Work on how local labor markets respond to shocks like mass layoff events and recessions is a case in point. While the near-term pain of these shocks has raised more and more questions, the conventional wisdom of a relatively benign “adjustment” period over the medium-term has largely survived. The general consensus: Workers and local economies will adjust. Dislocated workers will leave distressed regions and move to healthier ones. Jobless rates will revert to the mean.

http://www.brookings.edu/blogs/the-avenue/posts/2016/04/18-economic-shocks-muro