Beveridge curve


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.

Year of Publication
Date Published
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Citation Key
Brookings Papers on Economic Activity, Vol 0, No. 1, 1999
Krueger, A., & Katz, L. (1999). The High-pressure U.S. Labor Market of the 1990s. Retrieved from (Original work published 05/1999AD)
Working Papers