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A Duration‐sensitive Measure of the Unemployment Rate: Theory and Application

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  • Vani K . Borooah

Abstract

The measurement of unemployment, like that of poverty, involves two distinct steps: identification and aggregation. In this two‐step process, the issue of identifying the unemployed has received considerable attention but, once the unemployed have been identified, the aggregation issue has been addressed by simply 'counting heads': the unemployment rate is conventionally defined as the proportion of the labour force that, on a given date, is unemployed. This, in particular, leads to differences between individuals, in their unemployment experiences being ignored when the unemployment rate is being computed. This paper - predicated on the proposition that what matters to a person is not just the fact of unemployment but also its duration - proposes a methodology, derived from the measurement of income inequality, for adjusting unemployment rates so as to make them 'duration‐sensitive'. In consequence, different values of the 'duration‐sensitive' rate will, depending upon the degree of inequality in the distribution of unemployment duration, and upon the extent to which society is averse to such inequality, be associated with the same value of the conventionally defined unemployment rate. A numerical example, based on published data for seven major OECD counties, illustrates the methodology. Copyright Fondazione Giacomo Brodolini and Blackwell Publishers Ltd 2002.

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Bibliographic Info

Article provided by CEIS in its journal Labour.

Volume (Year): 16 (2002)
Issue (Month): 3 (09)
Pages: 453-468

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Handle: RePEc:bla:labour:v:16:y:2002:i:3:p:453-468

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Cited by:
  1. Carlos Gradín & Olga Cantó & Coral del Río, 2012. "Unemployment and Spell Duration during the Great Recession in the EU," Working Papers 1205, Universidade de Vigo, Departamento de Economía Aplicada.
  2. Stephen Bazen & Xavier Joutard & Mouhamadou M. Niang, 2012. "The Duration-Based Measurement of Unemployment: Estimation Issues and an Application to Male-Female Unemployment Differences in France," Working Papers halshs-00793056, HAL.

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