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A Duration-Sensitive Measure of the Unemployment Rate: Theory and Application

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  • Vani K. Borooah

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Abstract

The measurement of unemployment, like that of poverty, involves two distict steps: identification and aggregation. In this two-step process, the issue of identifying the unemployed has received considerable attention but, once the unemployed have been identiified, the aggregation issue has been addressed by simply "counting heads": the unemployment rate is conventionally defined as the proportion of the labour force that, on a given date, is unemployed. This, in particular, leads to differences between individuals, in their unemployment experiences being ignored when the unemployment rate is being computed. This paper - predicated on the proposition that what matters to a person is not just the fact of unemployment but also its duration - proposes a methodology, derived from the measurement of income inequality, for adjusting unemployment rates so as to make them "duration-sensitive". In consequence, different values of the "duration-sensitive" rate will, depending upon the degree of inequality in the distribution of unemployment duration, and upon the extent to which society is averse to such inequality, be associated with the same value of the conventionally defined unemployment rate. A numerical example, based on published data for seven major OECD countries, illustrates the methodology.

Suggested Citation

  • Vani K. Borooah, 2002. "A Duration-Sensitive Measure of the Unemployment Rate: Theory and Application," ICER Working Papers 19-2002, ICER - International Centre for Economic Research.
  • Handle: RePEc:icr:wpicer:19-2002
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    File URL: http://www.biblioecon.unito.it/biblioservizi/RePEc/icr/wp2002/borooah19-02.pdf
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    References listed on IDEAS

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    1. Sen, Amartya K, 1976. "Poverty: An Ordinal Approach to Measurement," Econometrica, Econometric Society, vol. 44(2), pages 219-231, March.
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    Cited by:

    1. Basu, Kaushik & Nolen, Patrick, 2004. "Vulnerability, Unemployment and Poverty: A New Class of Measures, Its Axiomatic Properties and Application," Working Papers 04-07, Cornell University, Center for Analytic Economics.
    2. Peter Lambert, 2009. "Mini-symposium: The 1990, 1992 and 1993 papers on distributionally sensitive measures of unemployment by Manimay Sengupta and Anthony Shorrocks," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 7(3), pages 269-271, September.
    3. Naschold, Felix, 2016. "Measuring Poverty Over Time - Accounting for the intertemporal distribution of poverty," 2016 Annual Meeting, July 31-August 2, 2016, Boston, Massachusetts 235722, Agricultural and Applied Economics Association.
    4. Carlos Gradín & Olga Cantó & Coral Río, 2017. "Measuring employment deprivation in the EU using a household-level index," Review of Economics of the Household, Springer, vol. 15(2), pages 639-667, June.
    5. Sripad Motiram & Karthikeya Naraparaju, 2014. "Unemployment Burden and its Distribution: Theory and Evidence from India," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2014-026, Indira Gandhi Institute of Development Research, Mumbai, India.
    6. Sripad Motiram & Karthikeya Naraparaju, 2014. "Unemployment Burden and its Distribution: Theory and Evidence from India," Working Papers id:6066, eSocialSciences.
    7. García, A., 2016. "Oaxaca-Blinder Type Counterfactual Decomposition Methods for Duration Outcomes," DOCUMENTOS DE TRABAJO 014186, UNIVERSIDAD DEL ROSARIO.
    8. Stephen Bazen & Xavier Joutard & Mouhamadou Niang, 2014. "The measurement of unemployment using completed durations: evidence on the gender gap in unemployment in France," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 12(4), pages 517-534, December.
    9. Sripad Motiram & Karthikeya Naraparaju, 2014. "Unemployment burden and its distribution: Theory and evidence from India," Working Papers 341, ECINEQ, Society for the Study of Economic Inequality.
    10. Stephen Bazen & Xavier Joutard & Mouhamadou M. Niang, 2012. "The Duration-Based Measurement of Unemployment: Estimation Issues and an Application to Male-Female Unemployment Differences in France," Working Papers halshs-00793056, HAL.
    11. Carlos Gradín & Coral Del Río & Olga Cantó, 2012. "Measuring Poverty Accounting For Time," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 58(2), pages 330-354, June.
    12. Carlos Gradin & Olga Canto & Coral del Rio, 2012. "Measuring employment deprivation among households in the EU," Working Papers 247, ECINEQ, Society for the Study of Economic Inequality.
    13. Basu, K & Nolen, PJ, 2006. "Vulnerability, Unemployment and Poverty: A Class of Distribution and Sensitive Measures, Its Axiomatic Properties and Applications," Economics Discussion Papers 2911, University of Essex, Department of Economics.

    More about this item

    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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