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New data on worker flows during business cycles

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Author Info

  • Hoyt Bleakley
  • Ann E. Ferris
  • Jeffrey C. Fuhrer

Abstract

The most obvious economic cost of recessions is that workers become involuntarily unemployed. During the average business cycle contraction, total employment declines by about 1.5 percent, the unemployment rate rises by 2.7 percentage points, and it takes almost two years before employment recovers its pre-recession level. Both fiscal policy and monetary policy are concerned with these business cycle deviations of employment from its "full-employment" or "equilibrium" level. The aggregate statistics on employment and unemployment mask economically important information about the composition of the unemployed and their experience over time. This paper examines the differential experience during a business cycle of those who quit their jobs, those who are on layoff subject to future recall, and those who suffer permanent job separations. Using a new data set that assembles the flows of workers into and out of unemployment, employment, and not-in-the-labor- force, the authors examine the behavior over time of workers who enter and leave the ranks of the unemployed, grouped by the reason for unemployment. They find that a closer look at the flows into and out of unemployment that lie beneath changes in total unemployment improves forecasts of inflation and unemployment, relative to standard models.

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Bibliographic Info

Article provided by Federal Reserve Bank of Boston in its journal New England Economic Review.

Volume (Year): (1999)
Issue (Month): Jul ()
Pages: 49-76

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Handle: RePEc:fip:fedbne:y:1999:i:jul:p:49-76

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Related research

Keywords: Business cycles ; Employment (Economic theory) ; Unemployment ; Labor supply ; Labor mobility ; Recessions;

References

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  1. Lancaster, Tony, 1979. "Econometric Methods for the Duration of Unemployment," Econometrica, Econometric Society, vol. 47(4), pages 939-56, July.
  2. Anne E. Polivka & Stephen M. Miller, 1998. "The CPS after the Redesign: Refocusing the Economic Lens," NBER Chapters, in: Labor Statistics Measurement Issues, pages 249-289 National Bureau of Economic Research, Inc.
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  13. Jaeger, David A, 1997. "Reconciling the Old and New Census Bureau Education Questions: Recommendations for Researchers," Journal of Business & Economic Statistics, American Statistical Association, vol. 15(3), pages 300-309, July.
  14. Christopher L. Foote, 1998. "Trend Employment Growth and the Bunching of Job Creation and Destruction," Harvard Institute of Economic Research Working Papers 1818, Harvard - Institute of Economic Research.
  15. repec:fth:prinin:382 is not listed on IDEAS
  16. Devine, Theresa J. & Kiefer, Nicolas M., 1991. "Empirical Labor Economics: The Search Approach," OUP Catalogue, Oxford University Press, number 9780195059366, September.
  17. Nickell, Stephen J, 1979. "Estimating the Probability of Leaving Unemployment," Econometrica, Econometric Society, vol. 47(5), pages 1249-66, September.
  18. Oliver Jean Blanchard & Peter Diamond, 1990. "The Cyclical Behovior of the Gross Flows of U.S. Workers," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 21(2), pages 85-156.
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