the flow approach to labor markets the flow approach to labor markets builds up from the flows of workers and of jobs it is based on three essential components a specification of labor demand in terms of flows of job creation destruction a process of matching between workers and firms and a process of wage determination where wages depend on the labor market prospects of employed workers and firms we think that this approach gives the right basic picture of unemployment and unemployment dynamics and of the relation between wage movements and the state of the labor market the additional richness it naturally delivers also captures important implications of labor market mechanisms for macroeconomics finally its structure is realistic enough to allow for a productive interaction with and use of micro work and micro evidence in both labor and product markets this paper shows the structure of the approach and some of its implications the first section develops a barebone model the second adds the flesh this abstract was borrowed from another version of this item

the ins and outs of unemployment in canada 1976 2008 this paper studies the flows into and out of unemployment in canada at an aggregate and a number of disaggregated levels i find that inflows into unemployment are countercyclical and outflows are procyclical at an aggregate level changes in the rate at which individuals leave unemployment account for most of the changes in unemployment rates in canada between 1976 and 2008 however flows into unemployment matter more at some disaggregated levels there are also some differences in the contributions of flows into and out of unemployment to changes in unemployment rates across the 1981 82 and 1990 92 recessions ce texte etudie les entrees et sorties du chomage au canada au niveau agrege et a un certain nombre de niveaux de desagregation on decouvre que les entrees en chomage sont contre cycliques et les sorties pro cycliques au niveau agrege les changements dans le taux de sorties du chomage expliquent le gros des changements dans les taux de chomage au canada entre 1976 et 2008 cependant les flux a l entree sont plus importants a certains niveaux de desagregation on note aussi des differences dans la contribution des flux a l entree et a la sortie du chomage aux changements dans les taux de chomage au cours des recessions de 1981 82 et de 1990 92

optimal unemployment insurance in ge a robust calibration approach abstract a simple monte carlo calibration approach is implemented in a ge model with uninsurable employment risk to quantitatively study the optimal replacement rate of a public unemployment insurance ui scheme the optimal ui sampling distribution is found to be bimodal

are unemployment and out of the labor force behaviorally distinct labor force states this paper tests the hypothesis that the classifications unemployed and out of the labor force are behaviorally meaningless distinctions this hypothesis is rejected distinct behavioral equations govern transitions from out of the labor force to employment and from unemployment to employment the evidence reported in this paper is broadly consistent with versions of search theory in which unemployment is a state that facilitates the job search process in an appendix we demonstrate that log concavity of the wage offer distribution implies that the exit rate from unemployment is an increasing function of the rate of arrival of job offers

the measurement of labor force dynamics with longitudinal data the labour market activity survey filter this article explores the measurement of labor force dynamics using longitudinal data focusing in particular on the canadian labour market activity survey lmas which represents a potential advance in longitudinal data collection because it measures aspects of dynamics not available in existing panel data such as the panel study of income dynamics and the national longitudinal survey we examine the implications of the lmas questionnaire structure the lmas filter for the study of labor market dynamics and undertake simulations to provide a quantitative assessment of the importance of this filter for labor force spells and transitions between labor force states

estimating labour market transitions and continuations using repeated cross sectional data abstract this paper proposes a population cohort approach for estimating labour market continuations or transitions using repeated cross sectional data this approach allows for the construction of consistent standard errors that account for the full variability of cross sectional data

misclassification errors and the underestimation of the us unemployment rate using recent results in the measurement error literature we show that the official u s unemployment rates substantially underestimate the true levels of unemployment due to misclassification errors in labor force status in current population surveys our closed form identification of the misclassification probabilities relies on the key assumptions that the misreporting behaviors only depend on the true values and that the true labor force status dynamics satisfy a markov type property during the period of 1996 to 2009 the corrected monthly unemployment rates are 1 to 4 6 percentage points 25 to 45 higher than the official rates and are more sensitive to changes in business cycles labor force participation rates however are not affected by this correction we also provide results for various subgroups of the u s population defined by gender race and age

unemployment and nonemployment heterogeneities in labor market states abstract the determination of how to distinguish between unemployment and nonparticipation is important and controversial the conventional approach employs a priori reasoning together with self reported current behavior this paper employs an evidence based classification of labor force status using information about the consequences of the behavior of the nonemployed we find that marginal attachment defined as desiring work although not searching is a distinct labor market state lying between those who do not desire work and the unemployed furthermore important heterogeneities exist within these nonemployment states two subsets of nonparticipants both engaged in waiting display behavior similar to the unemployed

wages and employment in a segmented labor market this paper analyzes the impact of business cycle fluctuations on a labor market segmented into a unionized primary sector and a competitive secondary sector either permanent or temporary changes in real aggregate demand are shown to widen the intersectoral wage differential in recession and under reasonable specifications of key parameters to cause greater fluctuations of primary sector employment than secondary sector employment this pattern agrees with the stylized facts of the u s economy

unemployment benefits and labor market transitions a multinomial logit model with errors in classification this paper utilizes validation data on survey response error in the current population survey to generalize the standard multinomial logit model to allow for spurious events that result from classification error the authors basic approach could be used with other stochastic models of discrete events as well they illustrate their algorithm by studying the effect of unemployment insurance on transitions from unemployment to employment and on labor force withdrawal their results confirm earlier work suggesting that unemployment insurance lengthens unemployment spells and show that correcting for classification error strengthens the apparent effect of unemployment insurance on spell durations copyright 1995 by mit press

does the ilo definition capture all unemployment the labour market status of many non working persons is at the boundary between unemployment and inactivity like the unemployed they seek and are available for work unlike them their last search action was not recent enough to meet the ilo definition of unemployment in this paper we examine by non parametric tests how the transition probabilities of these out of the labour force job seekers differ from those of the unemployed as well as the other non participants first using data from the european community household panel we show that in most eu countries these job seekers constitute a distinct labour market state second we rely on information only available in the italian labour force survey to derive a measure of search intensity which we use to break down the out of the labour force job seekers on the basis of their transition probabilities the most active are indistinguishable from the unemployed

the rise of the added worker effect we document that the added worker effect awe has increased over the last three decades we develop a search model with two earner households and we illustrate that the increase in the awe from the 1980s to the 2000s can be explained through i the narrowing of the gender pay gap ii changes in the frictions in the labor market and iii changes in the labor force participation costs of married women

employers on line recruitment and screening practices i introduction at a relatively low cost the internet offers employers and job searchers access to detailed and up to date information about job searchers and job vacancies in different locations around the world as well as novel tools that improve the ease and speed of search 1 it is therefore not surprising that using the internet has become an integral part of employers and job searchers search practices 2 however research has to date revealed relatively little about the internet s role in matching job searchers to jobs about activities that employers and job searchers pursue on line and whether the internet benefits all employers and job searchers equally in this paper we use technology in a novel way in order to collect new data and assess how employers use services offered by on line job boards in an attempt to facilitate their search the data record descriptions of job vacancies that were posted on the on line job board monster com from 2004 to 2006 from each vacancy s description we can identify employers use of on line search tools offered free of charge by monster com that are designed to facilitate employers search we can also identify several vacancy and employer attributes after the data collection we tracked each vacancy for 16 weeks to identify the week a vacancy could no longer be accessed for viewing on the basis of this information we construct a measure of an employer s on line search outcome the duration of a vacancy s posting on monster com we use these insights for two purposes first we examine employers use of services that are offered by monster com the incidence of employers use of these services when posting job openings on line and attributes that can help to explain their use second we examine whether vacancy and employer characteristics can also help to explain how long it takes before employers withdraw postings of their job vacancies from the on line job board we find that not all employers choose to use on line search tools when posting their vacancies on monster com even though the tools can be used free of charge and are designed to facilitate employers search on line recruitment and screening tools are more likely to be used when employers indicate active engagement in search or have a better knowledge of the monster s online search technology due to having used it frequently a standard model of employer search suggests that vacancy characteristics should help to explain employers choice of on line search tools however we find that relatively small differences exist in the likelihood that the online search tools are used across different types of vacancies both vacancy and employer characteristics can help to explain differences in the duration of a vacancy s posting on monster com in a manner that is consistent with a model of employer search in his survey autor 2001 was the first to review potential implications of the internet for the functioning of the labor market at the time when the on line recruiting industry was in its infancy since then several papers have drawn on different data to examine the internet s role in the labor market our paper complements this literature in three respects first it is one of the first to document how employers use services offered by on line job boards to facilitate their recruitment efforts in this respect the paper by hadass 2004 is of some interest using data on the recruitment efforts of a single u s manufacturing firm in the second half of the 1990s hadass finds that new hires who were recruited via the internet experience shorter tenure than those recruited via informal channels but similar tenure to those recruited through newspaper ads or a hired recruitment agency in her analysis hadass can say much more about the internet s role in matching workers to jobs than this paper because the author observes the outcomes of job searchers who were recruited on line and can compare them to the outcomes of job searchers who were recruited through traditional search channels

household search and the aggregate labor market we develop a theoretical model with labour market frictions incomplete financial markets and with households which have two members households face unemployment risks but their members adjust their labour supplies to insure against unemployment we use the model to explain the cyclical properties of aggregate employment and participation as in the u s data the model predicts that the participation rate the fraction of individuals that want jobs is not strongly correlated with aggregate economic activity this property is in sharp contrast to the strongly procyclical participation predicted by both neoclassical models and models with search frictions when we assume bachelor households or households with infinitely many members complete markets in the two member household model and in the data primary earners are always in the labour force secondary earners have a mildly countercyclical participation rate and a mildly procyclical employment rate their behaviour insures the household against unemployment risks

gender gaps in unemployment rates in oecd countries in some oecd countries the male and female unemployment rates are very similar but in others notably the mediterranean countries the female unemployment rate is much higher than the male explaining these cross country differences is the subject of this article we show that in countries where there is a large gender gap in unemployment rates there is a gender gap in both flows from employment into unemployment and from unemployment into employment we conclude that differences in human capital accumulation between men and women interacted with labor market institutions is an important part of the explanation

equilibrium search unemployment endogenous participation and labor market flows the sustainability of welfare states requires high employment and high participation to raise the tax base to analyze labor supply in a world with market frictions we propose and solve a macro model of the labor market with unemployment and labor force participation as endogenous and distinct states in our world workers decisions of participating are determined by an entry decision and an exit decision a calibration of the model improves the usual representations of labor markets since it quantitatively accounts for the observed flows between employment and nonparticipation the paper investigates also the effect of payroll taxes and unemployment benefits on participation decisions taxes reduce entries and increase exits whereas unemployment benefits at a given job finding rate raise entries and have ambiguous effects on exits jel j2 j6

labor supply response to welfare programs a dynamic analysis previous static analyses of the work disincentive effects of welfare programs are extended to a dynamic context using a sample of continuous longitudinal labor market histories estimates are derived for welfare nonwelfare differences in labor market flows among the states of employment unemployment and nonparticipation the estimates are used to identify the main sources of the lower employment and labor force participation rates and higher unemployment rate of welfare recipients the findings indicate that welfare programs have substantial effects on virtually every labor market transition examined but that the primary source of the static work disincentive effect is slower entry into employment

fishing in different pools job search strategies and job finding success in canada in the early 1980s this article examines the job search methods of jobless workers and emphasizes sample selectivity in choice of job search strategies especially use of public employment agencies longitudinal data from the labour force survey of canada for 1981 1983 and 1986 indicate that job search methods change with the business cycle and that many people find jobs without any reported search the determinants of job search success also vary substantially over the business cycle implying a substantial social return to public employment agencies at the 1983 trough of the recession but no noticeable benefits when aggregate unemployment is relatively low

how local are labor markets evidence from a spatial job search model this paper models the optimal search strategies of the unemployed across space to characterize local labor markets our methodology allows for linkages between numerous areas while preserving tractability we estimate that labor markets are quite local as the attractiveness of jobs to applicants sharply decays with distance also workers are discouraged from searching in areas with strong job competition from other jobseekers however as labor markets overlap a local stimulus or transport improvements have modest effects on local outcomes because ripple effects in job applications dilute their impact across a series of overlapping markets

accounting for quality issues with modeling the impact of r d on economic growth and carbon emissions in developing economies the literature on climate policy modeling has paid scant attention to the important role that r d is already playing in industrializing countries such as china where r d investments are targeting not only productivity improvements but also enhancements in the quality and variety of products we focus here on the effects of quality enhancing innovation on energy use and ghg emissions in developing countries we construct an analytical model to show that efficiency improving and quality enhancing r d have opposing influences on energy and emission intensities with the efficiency improving r d having an attenuating effect and quality enhancing r d having an amplifying effect we find that the balance of these opposing forces depends on the elasticity of upstream output with respect to efficiency improving r d the elasticity of downstream output with respect to upstream quality enhancing r d occurring upstream and the relative shares of emissions intensive inputs in the costs of production of upstream versus downstream industries we employ a computable general equilibrium cge simulation of the chinese economy to illustrate the difficulties that arise in incorporating these results into models for climate policy analysis and we offer a simple remedy

search behaviour transitions to non participation and the duration of unemployment using longitudinal micro data on unemployed individuals for 1983 85 a structural job search model is estimated the model allows for transitions from unemployment to nonparticipation an extended version of the model deals with the influence of on the job search and prospective wage increases on search behavior of the unemployed the empirical results show that the probability of accepting a job offer is almost one for most unemployed individuals a large portion of unemployment spells ends in a transition out of the labor force the effects of changes in benefits on duration appear to be extremely small copyright 1990 by royal economic society

earnings unemployment and the allocation of time over time since an individual s labour market history can be described by a markov chain in state space it is possible to calculate the steady states it is natural to interpret the steady state proportion in unemployment for a group of identical workers as the natural rate of unemployment for this group i e it is the expected proportion that would be employed if the environment were to remain constant it is shown how the natural rate of unemployment is different for different groups the model is estimated using data from a large u s income maintenance experiment the predictions of the model with some exceptions bear up well to confrontation by data the empirical findings also accord well with existing evidence on cross section studies of labour supply we find that labour force participation rates implied by the estimated models are positively related to earnings for all age sex and race groups as expected we demonstrate that the elasticities of the unemployment rates for all groups with respect to expected wage rates are negative and large in absolute value in the case of adults while the role of the wage in allocation of time is not novel the existing neoclassical labour literature uses static labour supply models to interpret participation rate studies

job search in thick markets abstract i analyze empirically the effects of urban and industrial agglomeration on both search behavior and the efficiency of matching the analysis is based on a unique panel data set from the italian labor force survey micro data covering 520 randomly drawn local labor market areas 66 of the total over the four quarters of 2002 i compute transition probabilities from non employment to employment by jointly estimating the probability of searching and the probability of finding a job conditional on having searched i then test whether these are affected by market size industrial variety and or industry specialization the main results indicate that market size and industry specialization raise job seekers chances of finding employment conditional on having searched while industrial variety is not significantly different from zero finally the effect of agglomeration on non employed individuals search behavior cannot be significantly distinguished from zero

measuring the equilibrium effects of unemployment benefits dispersion we analyze the impact of unemployment benefits and minimum wagesusing an equilibrium search model which allows for dispersion ofbenefits and productivity levels job to job transitions andstructural and frictional unemployment the estimation method usesreadily available aggregate data on marginal distributions ofunemployment durations as well as wages and benefit levels different causes of structural and frictional unemployment areinvestigated we investigate the efficiency of the imposition of asingle benefit level for all household types and the introductionof an earned income tax credit

a theory of dual labor markets with application to industrial policy discrimination and keynesian unemployment this paper develops a model of dual labor markets based on employers need to motivate workers in order to elicit effort from their workers employers may find it optimal to pay more than the going wage this changes fundamentally the character of labor markets the model is applied to a wide range of labor market phenomena it provides a coherent framework for understanding the claims of industrial policy advocates it also can provide the basis for a theory of occupational segregation and discrimination that will not be eroded by market forces finally the model provides the basis for a theory of involuntary unemployment

are unemployment and out of the labor force behaviorally distinct labor force states abstract this paper uses the j test developed by mackinnon et al 1983 and us gross change data for six age sex demographic groups to test the hypothesis that unemployment and out of the labor force are behaviorally meaningless distinctions results obtained with these data and test confirm those obtained by flinn and heckman 1983 we found that for young ages 16 19 and young adult ages 20 24 males and females the two states are distinct whereas for prime age males and females ages 25 44 this distinction is meaningless

new evidence on whether unemployment and out of the labor force are distinct states this paper focuses on the question of whether people who are out of the labor force olf should be included in unemployment measures if people who are olf can obtain jobs as often as the people who are unemployed then there is no real distinction between the two states of nonemployment surprisingly there has been very little effort surrounding this issue in the past clark and summers 1982 conclude that for teenagers unemployment and olf are not distinct states while flinn and heckman 1982a find the opposite for white male high school graduates the methodology adopted in this paper enables one to use incomplete transition data on unemployment and olf and to obtain estimates of the full transition matrix between three labor force states that are not possible with standard methods new evidence for high school graduates is presented by gender and it is found that while for young women the two states are distinct for young men they are not

unemployment participation and worker flows over the life cycle we estimate and report life cycle transition probabilities between employment unemployment and inactivity for male workers using current population survey monthly files we assess the relative importance of each probability in explaining the life cycle profiles of participation and unemployment rates using a novel decomposition method a key robust finding is that most differences in participation and unemployment over the life cycle can be attributed to the probability of leaving employment and the probability of transiting from inactivity to unemployment while transitions from unemployment to employment the job finding probability play secondary roles we then show that a simple life cycle extension of a three state labor search model with leisure shocks can qualitatively replicate the empirical unemployment and participation life cycle profiles without introducing age or worker heterogeneity in market abilities we conclude that models that seek to explain life cycle work patterns should not ignore transitions to and from inactivity

the cyclical behavior of the beveridge curve in the housing market abstract this paper develops a business cycle model of the housing market with search frictions and entry of both buyers and sellers the housing market exhibits a well established cyclical component which features three stylized facts prices move in the same direction as sales and the number of houses for sale but opposite to the time it takes to sell a house these stylized facts imply that in the data housing vacancies and the number of buyers are positively correlated i e that the beveridge curve is upward sloping a baseline search and matching model of the housing market is unable to match these stylized facts because it inherently generates a downward sloping beveridge curve with free entry of both buyers and sellers our model reproduces the positive correlation between prices sales and vacancies and matches the stylized facts qualitatively and quantitatively

on the robustness of alternative unemployment measures abstract the unemployment rate is one of the most important economic indices this article extends the work of feng and hu 2013 and examines the effects of potential misclassifications in labor force statuses on the different bureau of labor statistics bls unemployment measures compared to the official us unemployment rate u 3 the broader measure u 6 is more robust to such classification errors in the survey data that are used to calculate unemployment rates if one prefers the definitions of u 3 then we offer an approach to use reported unemployment measures to proxy for the unobserved true u 3

canadian labour market performance in international perspective my objective is to assess canadian labour market outcomes in recent decades and to compare canada s performance with that experienced in other industrialized countries the focus is on three key dimensions employment unemployment and the structure of earnings although my main purpose in the paper is to examine the canadian record i also ask what we can learn from canada s experience about the causes of some of the salient economic developments in oecd countries the rise and persistence of unemployment in europe and the growth of income inequality in countries such as the united states the united kingdom canada and australia let s begin with the question how well has the canadian economy performed during the past three decades if our reference point is the 1950s and 1960s the answer is likely to be poorly indeed the first twenty five years following the second world war now appear as a golden era since that period real income growth has been slow earnings have become more unequally distributed and unemployment has trended upward reaching levels that would have been considered outside the range of plausibility in the 1960s however most of the advanced countries have experienced a sharp deterioration in their economic performance since the early 1970s the turbulent world economic environment has made it difficult to sustain the kind of outcomes ob

the measurement of unemployment an empirical approach although the unemployment rate is one of the most widely cited and closely monitored economic statistics the definition and measurement of unemployment remain controversial an important issue is whether non employed persons who display a marginal attachment to the labor force for example those who are available for and desire work but are not searching for work should be classified as unemployed or non participants although this issue has been extensively debated it has never been tested empirically this paper carries out empirical tests of this and related hypotheses using a unique longitudinal data set from canada we find within the marginally attached a waiting group whose behavior indicates that they would be more appropriately classified as unemployed rather than out of the labor force the remainder of the marginally attached exhibit behavior between that of the unemployed and the balance of non participants suggesting that the desire for work among non searchers conveys substantial information about labor force attachment and future employment status our methods also apply to heterogeneity within the unemployed and we investigate behavioral variation linked to differences in job search methods and reasons for entry into unemployment although those using passive job search do exhibit behavior somewhat distinct from active searchers our results reject the practice of classifying passive job searchers as out of the labor force overall our results indicate that the non employed are very heterogeneous so that any single division into unemployment and out of the labor force is unlikely to fully capture the variety of degrees of labor force attachment this abstract was borrowed from another version of this item

screening unemployment in a dual labor market abstract equilibrium unemployment is shown to arise in a dual labor market when primary firms use status dependent hiring to screen heterogeneous labor characterization is given of equilibria with both complete and incomplete screening

long term unemployment and the great recession the role of composition duration dependence and nonparticipation we explore the role of composition duration dependence and labor force nonparticipation in accounting for the sharp increase in the incidence of long term unemployment ltu during the great recession we show that compositional shifts account for very little of the observed increase in ltu using panel data from the current population survey for 2002 7 we calibrate a matching model that allows for duration dependence in unemployment and transitions between employment unemployment and nonparticipation the calibrated model accounts for almost all of the increase in ltu and much of the observed outward shift in the beveridge curve between 2008 and 2013

an equilibrium theory of learning search and wages we propose an equilibrium theory of learning from search in the labor market which addresses the search behavior of workers the creation of jobs and the determination of wages as functions of labor market histories in the model each worker has incomplete information about his job finding ability and learns about it from his search outcomes the theory formalizes a notion akin to discouragement over each uninterrupted unemployment spell unemployed workers update their beliefs about their job finding abilities downward and reduce their desired wages one contribution of the paper is to integrate learning from search into an equilibrium framework by inducing endogenous heterogeneity in workers beliefs learning from search provides a novel explanation for a set of related empirical observations about the labor market including unemployment duration dependence and wage dispersion another contribution is to apply lattice theoretic techniques to analyze learning from experience which is useful because learning generates convex value functions and in principle multiple solutions to a worker s optimization problem

the lot of the unemployed a time use perspective this paper provides new evidence on time use and subjective well being of employed and unemployed individuals in 14 countries we devote particular attention to characterizing and modeling job search intensity measured by the amount of time devoted to searching for a new job job search intensity varies considerably across countries and is higher in countries that have higher wage dispersion we also examine the relationship between unemployment benefits and job search