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Unemployment and Nonemployment: Heterogeneities in Labor Market States

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  • Stephen R. G. Jones
  • W. Craig Riddell

Abstract

The determination of how to distinguish between unemployment and nonparticipation is important and controversial. The conventional approach employs a priori reasoning together with self-reported current behavior. This paper employs an evidence-based classification of labor force status using information about the consequences of the behavior of the nonemployed. We find that marginal attachment-defined as desiring work, although not searching-is a distinct labor market state, lying between those who do not desire work and the unemployed. Furthermore, important heterogeneities exist within these nonemployment states. Two subsets of nonparticipants-both engaged in waiting-display behavior similar to the unemployed. Copyright by the President and Fellows of Harvard College and the Massachusetts Institute of Technology.

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Bibliographic Info

Article provided by MIT Press in its journal The Review of Economics and Statistics.

Volume (Year): 88 (2006)
Issue (Month): 2 (May)
Pages: 314-323

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Handle: RePEc:tpr:restat:v:88:y:2006:i:2:p:314-323

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  1. Olivier Jean Blanchard & Peter Diamond, 1992. "The Flow Approach to Labor Markets," NBER Working Papers 4000, National Bureau of Economic Research, Inc.
  2. Flinn, Christopher J & Heckman, James J, 1983. "Are Unemployment and Out of the Labor Force Behaviorally Distinct Labor Force States?," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 1(1), pages 28-42, January.
  3. Coles, Melvyn & Petrongolo, Barbara, 2003. "A Test between Unemployment Theories Using Matching Data," IZA Discussion Papers 723, Institute for the Study of Labor (IZA).
  4. Coles, Melvyn G & Smith, Eric, 1994. "Marketplaces and Matching," CEPR Discussion Papers, C.E.P.R. Discussion Papers 1048, C.E.P.R. Discussion Papers.
  5. Stephen R. G. Jones & W. Craig Riddell, . "The Measurement Of Unemployment: An Empirical Approach," Canadian International Labour Network Working Papers, McMaster University 09, McMaster University.
  6. Stephen R. G. Jones & W. Craig Riddell, 1998. "Unemployment and Labor Force Attachment: A Multistate Analysis of Nonemployment," NBER Chapters, National Bureau of Economic Research, Inc, in: Labor Statistics Measurement Issues, pages 123-155 National Bureau of Economic Research, Inc.
  7. Füsun Gönül, 1992. "New Evidence on Whether Unemployment and out of the Labor Force are Distinct States," Journal of Human Resources, University of Wisconsin Press, University of Wisconsin Press, vol. 27(2), pages 329-361.
  8. Kim B. Clark & Lawrence H. Summers, 1979. "Labor Market Dynamics and Unemployemnt: A Reconsideration," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, Economic Studies Program, The Brookings Institution, vol. 10(1), pages 13-72.
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