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

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  • Toshihiko Mukoyama

    ()
    (Department of Economics, Concordia University)

  • Aysegul Sahin

    ()
    (Federal Reserve Bank of New York)

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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Bibliographic 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
Date of revision:
Handle: RePEc:crd:wpaper:04002

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

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References

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Citations

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Cited by:
  1. Nikita Céspedes & Ana Paola Gutiérrez & Vanessa Belapatiño, 2014. "Determinantes de la duración del desempleo en una economía con alta informalidad," Working Papers 2014-2, Peruvian Economic Association.
  2. Bachmann, Ronald & Sinning, Mathias, 2012. "Decomposing the Ins and Outs of Cyclical Unemployment," IZA Discussion Papers 6362, Institute for the Study of Labor (IZA).
  3. José Ferreira Machado & Pedro Portugal & Juliana Guimarães, 2006. "U.S. Unemployment Duration: Has Long Become Longer or Short Become Shorter?," Working Papers w200613, Banco de Portugal, Economics and Research Department.
  4. Mukoyama, Toshihiko, 2013. "Understanding the welfare effects of unemployment insurance policy in general equilibrium," Journal of Macroeconomics, Elsevier, vol. 38(PB), pages 347-368.
  5. Daniel Aaronson & Bhashkar Mazumder & Shani Schechter, 2010. "What is behind the rise in long-term unemployment?," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q II, pages 28-51.
  6. Della Lee Sue, 2008. "Unemployment Index: A Multidimensional Measure of Labor Market Efficiency," New York Economic Review, New York State Economics Association (NYSEA), vol. 39(1), pages 44-69.
  7. Toshihiko Mukoyama & Aysegul Sahin, 2004. "Why Did the Average Duration of Unemployment Become So Much Longer?," Working Papers 04002, Concordia University, Department of Economics.
  8. 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.
  9. Shigeru Fujita, 2011. "Declining labor turnover and turbulence," Working Papers 11-44, Federal Reserve Bank of Philadelphia.

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