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The High-pressure U.S. Labor Market of the 1990s

Author

Listed:
  • Lawrence Katz

    (Harvard University and NBER)

  • Alan B. Krueger

    (Princeton University and NBER)

Abstract

This paper examines the impact of selected labor market changes on the decline in the unemployment rate in the 1990s. The first section provides an overview of aggregate unemployment trends, inflation, and price and wage Phillips curves. The second section examines the effect of demographic changes on the unemployment rate. The third section examines the impact of the 150 percent increase in the number of men in jail or prison since 1985 on the unemployment rate. The fourth section examines the impact of evolving labor market intermediaries (namely worker profiling by the Unemployment Insurance system and the growth of the temporary help industry) on the unemployment rate. The fifth section explores whether worker bargaining power has become weaker, allowing for low unemployment and only modest wage pressure, because of worker job anxiety, the decline in union membership, or increased competitive pressures. The final section examines the impact of the tightest labor market in a generation on poverty. Our main findings are that changes in the age structure of the labor force, the growth of the male prison population, and, more speculatively, the rise of the temporary help sector, are the main labor market forces behind the low unemployment rate in the late 1990s.

Suggested Citation

  • Lawrence Katz & Alan B. Krueger, 1999. "The High-pressure U.S. Labor Market of the 1990s," Working Papers 795, Princeton University, Department of Economics, Industrial Relations Section..
    • Handle: RePEc:pri:indrel:416
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    References listed on IDEAS

    as
    1. Henry S. Farber, 1997. "The Changing Face of Job Loss in the United States, 1981-1995," Working Papers 761, Princeton University, Department of Economics, Industrial Relations Section..
    2. Orley Ashenfelter & David Ashmore & Olivier Deschenes, 1998. "Do Unemployment Insurance Recipients Actively Seek Work? Randomized Trials in Four U.S. States," Working Papers 791, Princeton University, Department of Economics, Industrial Relations Section..
    3. Katz, Lawrence F. & Autor, David H., 1999. "Changes in the wage structure and earnings inequality," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 26, pages 1463-1555 Elsevier.
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    More about this item

    Keywords

    unemployment; inflation; wage pressure; Beveridge curve;

    JEL classification:

    • N7 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services

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