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Employment persistence

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  • Charles A. Fleischman
  • Joshua Gallin

Abstract

The recent U.S. expansion has provided employment experience to individuals at tail of the skill distribution. Will these opportunities bestow persistent benefits in the form of greater future employability? Using synthetic cohorts constructed from the CPS, this paper estimates the degree of persistence in cohort-level employment rates in excess of persistence in aggregate macroeconomic conditions. This approach is in some ways superior to testing for hysteresis in the aggregate unemployment rate because it abstracts away from compositional changes in the labor force by focusing on particular demographic groups. After controlling for aggregate conditions, there is little evidence of significant persistence in cohorts' employment rates; the effects of aggregate shocks are essentially dissipated within three years. However, economic conditions that prevailed when the cohorts first entered the labor market significantly affect the average lifetime employment rate of cohorts of less-educated men.

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Bibliographic Info

Paper provided by Board of Governors of the Federal Reserve System (U.S.) in its series Finance and Economics Discussion Series with number 2001-25.

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Date of creation: 2001
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Handle: RePEc:fip:fedgfe:2001-25

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Related research

Keywords: Employment (Economic theory) ; Labor market;

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References

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  1. Kiviet, Jan F., 1995. "On bias, inconsistency, and efficiency of various estimators in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 68(1), pages 53-78, July.
  2. Olivier J. Blanchard & Lawrence H. Summers, 1986. "Hysteresis And The European Unemployment Problem," NBER Chapters, in: NBER Macroeconomics Annual 1986, Volume 1, pages 15-90 National Bureau of Economic Research, Inc.
  3. Hilary Hoynes, 1999. "The Employment, Earnings, and Income of Less Skilled Workers Over the Business Cycle," NBER Working Papers 7188, National Bureau of Economic Research, Inc.
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  7. Nelson, Charles R. & Plosser, Charles I., 1982. "Trends and random walks in macroeconmic time series : Some evidence and implications," Journal of Monetary Economics, Elsevier, vol. 10(2), pages 139-162.
  8. Hsiao,Cheng, 2003. "Analysis of Panel Data," Cambridge Books, Cambridge University Press, number 9780521522717, October.
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  10. Levin, Andrew & Lin, Chien-Fu & James Chu, Chia-Shang, 2002. "Unit root tests in panel data: asymptotic and finite-sample properties," Journal of Econometrics, Elsevier, vol. 108(1), pages 1-24, May.
  11. Jaeger, Albert & Parkinson, Martin, 1994. "Some evidence on hysteresis in unemployment rates," European Economic Review, Elsevier, vol. 38(2), pages 329-342, February.
  12. Dan T. Rosenbaum, 2000. "Ability, Educational Ranks, and Labor Market Trends: The Effects of Shifts in the Skill Composition of Educational Groups," JCPR Working Papers 146, Northwestern University/University of Chicago Joint Center for Poverty Research.
  13. 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.
  14. John Haltiwanger & Marilyn E. Manser & Robert Topel, 1998. "Labor Statistics Measurement Issues," NBER Books, National Bureau of Economic Research, Inc, number halt98-1, May.
  15. Arellano, Manuel & Bond, Stephen, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 277-97, April.
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