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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. Christopher J. Flinn & James J. Heckman, 1982. "Are Unemployment and Out of the Labor Force Behaviorally Distinct Labor Force States?," NBER Working Papers 0979, National Bureau of Economic Research, Inc.
  2. Coles, Melvyn & Petrongolo, Barbara, 2003. "A Test between Unemployment Theories Using Matching Data," IZA Discussion Papers 723, Institute for the Study of Labor (IZA).
  3. Jones, S.R.G. & Riddell, W.C., 1993. "The Measurement of Unemployment: An Empirical Approach," UBC Departmental Archives 93-48, UBC Department of Economics.
  4. 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, vol. 10(1), pages 13-72.
  5. 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, vol. 27(2), pages 329-361.
  6. Blanchard, Olivier Jean & Diamond, Peter, 1992. "The Flow Approach to Labor Markets," American Economic Review, American Economic Association, vol. 82(2), pages 354-59, May.
  7. Stephen R. G. Jones & W. Craig Riddell, 1998. "Unemployment and Labor Force Attachment: A Multistate Analysis of Nonemployment," NBER Chapters, in: Labor Statistics Measurement Issues, pages 123-155 National Bureau of Economic Research, Inc.
  8. Coles, Melvyn G & Smith, Eric, 1994. "Marketplaces and Matching," CEPR Discussion Papers 1048, C.E.P.R. Discussion Papers.
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Citations

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Cited by:
  1. Per Krusell & Toshihiko Mukoyama & Richard Rogerson & Aysegul Sahin, 2009. "A Three State Model of Worker Flows in General Equilibrium," NBER Working Papers 15251, National Bureau of Economic Research, Inc.
  2. Andrea Brandolini & Piero Cipollone & Eliana Viviano, 2006. "Does The Ilo Definition Capture All Unemployment?," Journal of the European Economic Association, MIT Press, vol. 4(1), pages 153-179, 03.
  3. Alena Bicakova, 2006. "Market vs. Institutions: The Trade-off Between Unemployment and Wage Inequality Revisited," Economics Working Papers ECO2006/31, European University Institute.
  4. Riddell, W. Craig & Song, Xueda, 2011. "Education, Job Search and Re-employment Outcomes among the Unemployed," IZA Discussion Papers 6134, Institute for the Study of Labor (IZA).
  5. Di Addario, Sabrina, 2011. "Job search in thick markets," Journal of Urban Economics, Elsevier, vol. 69(3), pages 303-318, May.
  6. Aysit Tansel & H. Mehmet Tasci, 2010. "Hazard Analysis Of Unemployment Duration By Gender In A Developing Country: The Case Of Turkey," Working Papers 521, Economic Research Forum, revised May 2010.
  7. Elena Stancanelli, 2007. "Evaluating the impact of the French tax credit on the employment rate of women," Documents de Travail de l'OFCE 2007-33, Observatoire Francais des Conjonctures Economiques (OFCE).
  8. Lene Kromann, 2009. "Does Employee Body Weight Affect Employers' Behavior?," Economics Working Papers 2009-04, School of Economics and Management, University of Aarhus.
  9. Yashiv, Eran, 2006. "U.S. Labor Market Dynamics Revisited," IZA Discussion Papers 2455, Institute for the Study of Labor (IZA).
  10. Gürbüz, Ayça Akarcay & Polat, Sezgin & Ulus, Mustafa, 2013. "In Limbo: Exploring transition to discouragement," GIAM Working Papers 13-4, Galatasaray University Economic Research Center.
  11. Garrido, Luis & Toharia, Luis, 2004. "What does it take to be (counted as) unemployed? The case of Spain," Labour Economics, Elsevier, vol. 11(4), pages 507-523, August.
  12. Tindara Addabbo & Anna Maccagnan, 2011. "The Italian Labour Market and the Crisis," Center for the Analysis of Public Policies (CAPP) 0086, Universita di Modena e Reggio Emilia, Dipartimento di Economia Politica.
  13. Katharine Bradbury, 2006. "Measurement of unemployment," Public Policy Brief, Federal Reserve Bank of Boston.
  14. Peder Pedersen & Torben Schmidt, 2011. "What is unemployment in Europe? Concepts and measurement in the European community household panel," Empirical Economics, Springer, vol. 40(3), pages 705-728, May.

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