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Estimating Labor Market Slack, U.S. 1994-2019

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  • John Komlos

Abstract

U3, the official unemployment rate, is an inadequate gauge of labor-market slack and the extent to which it misinforms varies substantially over the business cycle. The U6 unemployment rate is usually about 4 percentage points above U3. However, during the Great Recession it exceeded U3 by 7 percentage points for three years. Moreover, the U6-U3 gap is magnified among disadvantaged groups such as minorities, youth, and for the less educated. For instance, in January 2011 the U6-U3 gap among African American youth was 17.9 pps as U6 climbed to 47.5% and was similarly large among African Americans without a high-school diploma.

Suggested Citation

  • John Komlos, 2019. "Estimating Labor Market Slack, U.S. 1994-2019," CESifo Working Paper Series 7941, CESifo.
    • Handle: RePEc:ces:ceswps:_7941
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    File URL: https://www.cesifo.org/DocDL/cesifo1_wp7941.pdf
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    More about this item

    Keywords

    unemployment; U6; unemployment by ethnicity; discouraged workers; labor market slack;
    All these keywords.

    JEL classification:

    • J40 - Labor and Demographic Economics - - Particular Labor Markets - - - General
    • J49 - Labor and Demographic Economics - - Particular Labor Markets - - - Other
    • J69 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Other

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