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Time Series Changes in Youth Joblessness

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  • Michael L. Wachter
  • Choongsoo Kim
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    Abstract

    This study presents a time series analysis of the youth unemployment problem stressing the cohort overcrowding effect, a result of the baby-boom induced imbalance between younger and older workers. Several techniques are used to study the problem. First, reduced form unemployment equations are estimated for the disaggregated youth groups. The results indicate that secular swings in female and white youth unemployment rates do track well with the cohort imbalance hypothesis. However, relative increases in black male unemployment remain unexplained by this model. Second, alternative measures of youth unemployment are developed by treating school enrollment and military service as equivalent to employment. In addition, several employment-to-population ratio measures are explored. Third, equations for employment, unemployment, schooling and a residual category are estimated together. This allows one to analyze flows into and out of the four states with respect to changes in explanatory variables. The results suggest that youth unemployment rates, with the exception of the black male group, peaked in relative terms in the early l970s. A detailed analysis of the declining labor market position of blacks, however, uncovers puzzling results. Although black male unemployment rates are growing, and employment rates are declining, relative wages and school enrollment rates are increasing. In fact, at least half of the decline in black employment ratios can be associated with increasing school enrollment rates.

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    File URL: http://www.nber.org/papers/w0384.pdf
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    Bibliographic Info

    Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 0384.

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    Date of creation: Aug 1979
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    Publication status: published as Wachter, Michael L. and Kim, Choongsoo. "Time Series Changes in Youth Joblessness." The Youth Labor Market Problem: Its Nature, Causes and Consequences, edited by Richard B. Freeman and David A. Wise, pp. 155-198. Chicago: University of Chicago Press, 1982.
    Handle: RePEc:nbr:nberwo:0384

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    1. Edward M. Gramlich, 1976. "Impact of Minimum Wages on Other Wages, Employment, and Family Incomes," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 7(2), pages 409-462.
    2. Gordon, Robert J., 1977. "Structural unemployment and the productivity of women," Carnegie-Rochester Conference Series on Public Policy, Elsevier, Elsevier, vol. 5(1), pages 181-229, January.
    3. Ragan, James F, Jr, 1977. "Minimum Wages and the Youth Labor Market," The Review of Economics and Statistics, MIT Press, vol. 59(2), pages 129-36, May.
    4. Wachter, Michael L, 1972. "A Labor Supply Model for Secondary Workers," The Review of Economics and Statistics, MIT Press, vol. 54(2), pages 141-51, May.
    5. Moore, Thomas Gale, 1971. "The Effect of Minimum Wages on Teenage Unemployment Rates," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 79(4), pages 897-902, July-Aug..
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    Cited by:
    1. Juan F. Jimeno, . "Demografía, empleo, salarios y pensiones," Working Papers 2002-04, FEDEA.
    2. Lisa M. Lynch, 1986. "The Youth Labor Market in the 80s: Determinants of Re-Employment Probabilities for Young Men and Women," NBER Working Papers 2021, National Bureau of Economic Research, Inc.
    3. Marianne E. Page & Joanne Spetz & Jane Millar, 2005. "Does the minimum wage affect welfare caseloads?," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 24(2), pages 273-295.
    4. Torge Middendorf, 2007. "The Impact of Cohort Size and Local Labor Market Conditions on Human Capital Accumulation in Europe," Ruhr Economic Papers, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen 0010, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    5. Alba-Ramirez, Alfonso, 1995. "Cross-country differences in cyclical variations of male teenage employment," Economics Letters, Elsevier, Elsevier, vol. 48(3-4), pages 419-426, June.
    6. Stenberg, Anders & Wikström, Magnus, 2000. "Higher Education and the Determination of Aggregate Male Employment by Age," UmeÃ¥ Economic Studies 520, Umeå University, Department of Economics.
    7. Jacob Mincer & Linda S. Leighton, 1980. "Effect of Minimum Wages on Human Capital Formation," NBER Working Papers 0441, National Bureau of Economic Research, Inc.
    8. Alfonso Alba-Ramírez, 1998. "Re-employment probabilities of young workers in Spain," Investigaciones Economicas, Fundación SEPI, Fundación SEPI, vol. 22(2), pages 201-224, May.
    9. Jacob Mincer, 1981. "The Economics of Wage Floors," NBER Working Papers 0804, National Bureau of Economic Research, Inc.
    10. David E. Bloom & Richard B. Freeman, 1986. "The "Youth Problem": Age or Generational Crowding?," NBER Working Papers 1829, National Bureau of Economic Research, Inc.

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