| by
Hoyt Bleakley, Ann E. Ferris, and Jeffrey
C. Fuhrer
July/August 1999
The most obvious economic cost of recessions is that
workers become involuntarily unemployed. During the
average business cycle contraction, total employment
declines by about 1.5 percent, the unemployment rate
rises by 2.7 percentage points, and it takes almost
two years before employment recovers its pre-recession
level. Both fiscal policy and monetary policy are concerned
with these business cycle deviations of employment from
its "full-employment" or "equilibrium"
level.
The aggregate statistics on employment and unemployment
mask economically important information about the composition
of the unemployed and their experience over time. This
paper examines the differential experience during a
business cycle of those who quit their jobs, those who
are on layoff subject to future recall, and those who
suffer permanent job separations. Using a new data set
that assembles the flows of workers into and out of
unemployment, employment, and not-in-the-labor-force,
the authors examine the behavior over time of workers
who enter and leave the ranks of the unemployed, grouped
by the reason for unemployment. They find that a closer
look at the flows into and out of unemployment that
lie beneath changes in total unemployment improves forecasts
of inflation and unemployment, relative to standard
models.
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|
Figure 1 |
Gross Worker
Flows into and out of Employment |
|
Figure 2 |
Average Monthly
Values of Gross Stocks and Flows for Employment,
Unemployment, and Not in the Labor Force |
|
Figure 3 |
Flows out of
Employment, by Reason for Unemployment |
|
Figure 4 |
Escape Rates
from Unemployment, by Reason Unemployed |
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Figure 5 |
Worker Flows
in Manufacturing and Nonmanufacturing Sectors |
|
Figure 6 |
Worker Flows
by Industry |
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Figure 7 |
Escape Rates
from Unemployment into Employment, by Sector of
Previous Employment |
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Figure 8 |
Worker and
Job Flows in Manufacturing |
|
Figure 9 |
Comparison
of "Permanent" Worker Flows and Job Flows
in Manufacturing |
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Figure 10 |
Duration of
Completed Unemployment Spells |
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Figure 11 |
Explaining
High Unemployment Duration in the 1990s |
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Figure 12 |
Ratio of U-->N
Flows to U-->E Flows |
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Figure 13 |
Recent Unemployment
Forecasts |
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Figure 14 |
Alternative
Labor Market Indicators of Inflation |
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