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Why Did the Average Duration of Unemployment Become So Much Longer?

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Author Info
Toshihiko Mukoyama () (Department of Economics, Concordia University)
Aysegul Sahin () (Federal Reserve Bank of New York)

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Abstract

This paper examines the causes of the observed increase in the average unemployment duration over the past thirty years. First we analyze if changes in the demographic com- position of the U.S. labor force can explain this increase. In particular, we examine how much of the observed change can be explained by the change in age and gender compo- sition. We then consider institutional changes, such as the change in the generosity and coverage of unemployment insurance. Changes in the composition of the labor force and institutional changes can only partially account for the observed increase in the duration of unemployment. We construct a job search model and calibrate it to the U.S. data. The results indicate that more than 70% of the increase in the duration of unemployment over the last thirty years can be explained by an increase in within-group wage inequality.

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Publisher Info
Paper provided by Concordia University, Department of Economics in its series Working Papers with number 04002.

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Length: 27 pages
Date of creation: Sep 2004
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Handle: RePEc:crd:wpaper:04002

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Related research
Keywords: Unemployment Duration Demographic Change Within-Group Wage In-equality Job Search Model

Other versions of this item:

Find related papers by JEL classification:
E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
J64 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment: Models, Duration, Incidence, and Job Search
E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
J64 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment: Models, Duration, Incidence, and Job Search

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  6. Gary Burtless, 1983. "Why Is Insured Unemployment So Low?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 14(1983-1), pages 225-254. [Downloadable!]
  7. Katharine G. Abraham & Robert Shimer, 2001. "Changes in Unemployment Duration and Labor Force Attachment," NBER Working Papers 8513, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  11. Giovanni L. Violante, 2002. "Technological Acceleration, Skill Transferability, And The Rise In Residual Inequality," The Quarterly Journal of Economics, MIT Press, vol. 117(1), pages 297-338, February. [Downloadable!] (restricted)
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  12. Juhn, Chinhui & Murphy, Kevin M & Pierce, Brooks, 1993. "Wage Inequality and the Rise in Returns to Skill," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 410-42, June. [Downloadable!] (restricted)
  13. Andrews, Donald W K, 1993. "Tests for Parameter Instability and Structural Change with Unknown Change Point," Econometrica, Econometric Society, vol. 61(4), pages 821-56, July. [Downloadable!] (restricted)
    Other versions:
  14. McCall, John J, 1970. "Economics of Information and Job Search," The Quarterly Journal of Economics, MIT Press, vol. 84(1), pages 113-26, February. [Downloadable!] (restricted)
  15. Burdett, Kenneth & Mortensen, Dale T, 1998. "Wage Differentials, Employer Size, and Unemployment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(2), pages 257-73, May.
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. José A.F. Machado & Pedro Portugal & Juliana Guimaraes, 2006. "U.S. Unemployment Duration: Has Long Become Longer or Short Become Shorter?," IZA Discussion Papers 2174, Institute for the Study of Labor (IZA). [Downloadable!]
  2. Thomas B. King, 2005. "Labor productivity and job-market flows: trends, cycles, and correlations," Supervisory Policy Analysis Working Papers 2005-04, Federal Reserve Bank of St. Louis. [Downloadable!]
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