unemployment

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.

Year of Publication
1999
Number
416
Date Published
05/1999
Publication Language
eng
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 http://arks.princeton.edu/ark:/88435/dsp01dr26xx37d (Original work published 05/1999AD)
Working Papers
Author
Abstract

This paper studies the effects of the introduction of fixed-term contracts in Spain on the duration distribution of unemployment, with particular emphasis on the changes in duration
dependence. Since the introduction of fixed-term contracts in the mid 1980s, the Spanish labor market has become more dynamic in terms of inflows and outflows from unemployment to employment. I estimate a parametric duration model using cross-sectional data drawn from the Spanish Labor Force Survey from 1980 to 1994, which allows me to analyze the chances of leaving unemployment before and after the introduction of fixed-term contracts. I find evidence that for very short durations, of up to five months, the probability of leaving unemployment has increased since the introduction of fixed-term contracts. But the reverse is true for longer durations. Also, the chances of finding a job are significantly higher for those workers who became unemployed because their fixed-term contract came to an end than for
those who lost their job for other reasons. In addition, there is less duration dependence for
those who lost their job due to the expiration of a fixed-term contract than for those who lost their job for other reasons.

Year of Publication
2000
Number
443
Date Published
08/2000
Publication Language
eng
Citation Key
7930
Guell, M. (2000). The effects of fixed-term contracts on the duration distribution of unemployment: the Spanish case. Retrieved from http://arks.princeton.edu/ark:/88435/dsp01gh93gz498 (Original work published 08/2000AD)
Working Papers
Abstract

During the 1980s a substantial gap emerged between unemployment rates in Canada and the
United States. In this paper, we use microdata from labor force surveys at the beginning and
end of the decade to examine the sources of the emergent gap. As in earlier work, we find that
most of the relative rise in unemployment in Canada is attributable to an increase in the relative
"labor force attachment" of Canadians, rather than to any shortfall in relative employment.
Indeed, relative employment rates increased in Canada over the 1980s for younger workers and
for adult women. The relative rise in labor force attachment of Canadians is manifested by a
sharp increase in the propensity of non-workers to report themselves as unemployed (i.e. looking
for work) rather than out-of-the-labor force. This change is especially pronounced for individuals
who work just enough to qualify for unemployment insurance (UI) in Canada. Moreover, two-
thirds of the relative increase in weeks of unemployment among non-workers is associated with
the divergent trends in UI recipiency in the two countries. Both findings point to the availability
of UI benefits as an important determinant of the labor force attachment of nonworkers.

Year of Publication
1996
Number
352
Date Published
12/1996
Publication Language
eng
Citation Key
In B. Curtis Eaton and Richard Harris (eds.), Trade, Technology and Economics: Essays in Honour of Richard G. Lipsey, Brookfield, MA:Edward Elgar, 1997
Riddell, C., & Card, D. (1996). Unemployment in Canada and the United States: A Further Analysis. Retrieved from http://arks.princeton.edu/ark:/88435/dsp0108612n53n (Original work published 12/1996AD)
Working Papers
Abstract

In this paper we provide theoretical and empirical analyses of an
asymmetric-information model of layoffs in which the current employer is
better informed about its workers’ abilities than prospective employers
are. The key feature of the model is that when firms have discretion with
respect to whom to lay off, the market infers that laid-off workers are of
low ability. Since no such negative inference should be attached to
workers displaced in a plant closing, our model predicts that the post-
displacement wages of otherwise observationally equivalent workers will be
higher for those displaced by plant closings than for those displaced by
layoffs. A simple extension of our model predicts that the post-
displacement unemployment duration of otherwise observationally equivalent
workers will be lower for those displaced by plant closings than for those
displaced by layoffs.
In our empirical work, we use data from the Displaced Workers Supplements
in the January l984 and 1986 Current Population Surveys. For our whole
sample, we find that the evidence (with respect to both re-employment wages
and post-displacement unemployment duration) is consistent with the idea
that laid-off workers are viewed less favorably by the market than are
those losing jobs in plant closings. Furthermore, our findings are much
stronger for workers laid-off from jobs where employers have discretion
over whom to lay off, and much weaker for workers laid-off from jobs where
employers have little or no discretion over whom to lay off.

Year of Publication
1989
Number
249
Date Published
04/1989
Publication Language
eng
Citation Key
Journal of Labor Economics, Vol. 9, No. 4, October 1991.
Gibbons, R., & Katz, L. (1989). Layoffs and Lemons. Retrieved from http://arks.princeton.edu/ark:/88435/dsp01bg257f06q (Original work published 04/1989AD)
Working Papers
Abstract

This paper analyzes the results of the New Jersey Unemployment
Insurance Reemployment Demonstration Project (NJUIRDP) and presents a
framework for understanding the effects of the reemployment bonus and Job
Search Assistance (JSA) aspects of the program. A simple search model
which allows the possibility of recall leads to predictions about the time
pattern of the effects of a bonus offer on new job finding. The
experimental nature of the NJUIRDP allows the effect of the bonus to be
isolated, and evidence is found for a positive effect early in the bonus
period. This is consistent with the model. Evidence is also found that
initial expectation of recall has a negative effect on the new job finding
rate, but that this effect disappears over time. This is interpreted as
reflecting the updating of recall expectations, as pointed to by the search
model. This important interaction between time and recall expectations
implies that if JSA can speed up the adjustment of those expectations, the
new job finding rate will be increased. Evidence suggesting just such an
effect is found when the JSA treatment is isolated.

Year of Publication
1990
Number
263
Date Published
03/1990
Publication Language
eng
Citation Key
8062
Anderson, P. (1990). The Effect of a Reemployment Bonus with the Possibility of Recall: Experimental Evidence from New Jersey. Retrieved from http://arks.princeton.edu/ark:/88435/dsp01dz010q06m (Original work published 03/1990AD)
Working Papers
Author
Abstract

In this paper Lilien's (1982) hypothesis that sectoral shifts in employment
raise aggregate unemployment is tested using Canadian quarterly data. Lilien's
framework is extended to investigate regional labour market rigidities and to
distinguish between industry shifts that are correlated with changes in aggregate
activity, and those which are exogenous to the overall level of activity. The
robustness of the results to various changes in model specification is also
investigated. I find that in Canada exogenous shifts in employment between
sectors do not have a significant effect on the aggregate unemployment rate.

Year of Publication
1985
Number
200
Date Published
10/1985
Publication Language
eng
Citation Key
Review of Economics and Statistics
Neelin, J. (1985). Sectoral Shifts and Canadian Unemployment. Retrieved from http://arks.princeton.edu/ark:/88435/dsp010r967373k (Original work published 10/1985AD)
Working Papers
Abstract

Standard models of dynamic labor demand rely on the presence of
adjustment costs to explain the observed smoothness in employment patterns,
although the costs are often difficult to quantify. The experience rating
feature of the U.S. Unemployment Insurance (UI) system provides a
measurable linear cost of adjustment. Using a unique data set with
administrative data on over 8,000 firms, I estimate the effect of a
UI-induced linear adjustment cost on seasonal labor demand in retail trade.
I find strong support for the large role of adjustment costs in reducing
the employment response of firms to seasonal fluctuations in demand.

Year of Publication
1992
Number
293
Date Published
01/1992
Publication Language
eng
Citation Key
Quarterly Journal of Economics, Vol. 108, No. 4, November 1993
Anderson, P. (1992). Linear Adjustment Costs and Seasonal Labor Demand: Unemployment Insurance Experience Rating in Retail Trade. Retrieved from http://arks.princeton.edu/ark:/88435/dsp01b2773v699 (Original work published 01/1992AD)
Working Papers
Author
Abstract

The purpose of this paper is to summarize a certain line of work on
the interpretation of unemployment in the analysis of male labour supply
behavior. Specifically, this work investigates whether the data support
the null hypothesis that individuals experiencing unemployment are on a
labour supply function, and if the data do not support this hypothesis,
how might a researcher proceed in empirical work. The motivation for
doing this is two fold. First, what unemployment represents is an
intrinsically interesting question, and may have implications beyond
labour supply analysis in terms of macroeconomic theory. Second, if
unemployed workers are constrained in the sense that they are off their
individual labour supply functions, standard labour supply estimation
may involve a fundamental misspecification of the equation. However, it
should be emphasized that the purpose of this paper is to survey one
possible approach to this problem; the paper does not attempt to provide
a general survey on labour supply estimation or on constraints in the
labour market.

Year of Publication
1985
Number
195
Date Published
06/1985
Publication Language
eng
Citation Key
In Unemployment, Search and Labour Supply, ed. Richard Blundeall and Ian Walker (Cambridge, New York and Sydney:Cambridge University Press, 1986)
Ham, J. (1985). On the Interpretation of Unemployment in Empirical Labour Supply Analysis. Retrieved from http://arks.princeton.edu/ark:/88435/dsp01b8515n380 (Original work published 06/1985AD)
Working Papers
Abstract

Observations and Conjectures on the U.S. Employment Miracle
This paper has three goals. First, to place U.S. job growth in international perspective
by exploring cross-country differences in employment and population growth. This section finds
that the U.S has managed to absorb added workers -- especially female workers -- into
employment at a greater rate than most countries. The leading explanation for this phenomenon
is that the U.S. labor market has flexible wages and employment practices, whereas European
labor markets are rigid. The second goal of the paper is to evaluate the labor market rigidities
hypothesis. Although greater wage flexibility probably contributes to the U.S.'s comparative
success in creating jobs for its population, the slow growth in employment in many European
countries appears too uniform across skill groups to result from relative wage inflexibility alone.
Furthermore, a great deal of labor market adjustment seems to take place at a constant real wage
in the U.S. This leads to the third goal: To speculate on other explanations why the U.S. has
managed to successfully absorb so many new entrants to the labor market. We conjecture that
product market constraints contribute to the slow growth of employment in many countries.

Year of Publication
1997
Number
390
Date Published
08/1997
Publication Language
eng
Citation Key
8248
Pischke, J. -S., & Krueger, A. (1997). Observations and Conjectures on the U.S. Employment Miracle. Retrieved from http://arks.princeton.edu/ark:/88435/dsp01d217qp51c (Original work published 08/1997AD)
Working Papers
Author
Abstract

This study proposes and implements a specification test for the
hypothesis that unemployment represents intertemporal labour supply
behavior. The test allows for uncertainty and endogenous unemployment.
Given standard specifications of the intertemporal labour supply model, I
find strong evidence against this interpretation of unemployment. These
results indicate the need to turn to either 1) alternative models where
unemployed workers are off a supply function or ii) more complex models
of intertemporal substitution.

Year of Publication
1985
Number
196
Date Published
06/1985
Publication Language
eng
Citation Key
The Review of Economic Studies, Vol. 53, No. 4, Econometrics Special Issue, August 1986
Ham, J. (1985). Testing Whether Unemployment Represents Intertemporal Labor Supply Behavior. Retrieved from http://arks.princeton.edu/ark:/88435/dsp01ng451h50f (Original work published 06/1985AD)
Working Papers