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Temporary employment and the natural rate of unemployment

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  • Maria Ward Otoo

Abstract

This paper examines the determinants of the natural rate of unemployment using a combined cross section and time series data set. The results suggest that industry composition affects the natural rate. In particular, a higher share of temporary employment in a local labor market tends to lower the natural rate of unemployment--most likely through the matching function. The results suggest that the increase in the share of temporary employment may have reduced the natural rate as much as 1/4 percentage point. The results also indicate that unemployment insurance benefits tend to boost the natural rate, while having a more highly educated work force tends to lower it. However, the degree of union presence in a local labor market had little impact on the natural rate.

Suggested Citation

  • Maria Ward Otoo, 1999. "Temporary employment and the natural rate of unemployment," Finance and Economics Discussion Series 1999-66, Board of Governors of the Federal Reserve System (U.S.).
    • Handle: RePEc:fip:fedgfe:1999-66
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    References listed on IDEAS

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    Cited by:

    1. Todd E. Clark & Taisuke Nakata, 2006. "The trend growth rate of employment : past, present, and future," Economic Review, Federal Reserve Bank of Kansas City, vol. 91(Q I), pages 43-85.
    2. Christopher L. ERICKSON & Daniel J.B. MITCHELL, 2007. "Monopsony as a metaphor for the emerging post-union labour market," International Labour Review, International Labour Organization, vol. 146(3-4), pages 163-187, September.

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