Decomposing the ins and outs of cyclical unemployment

Arbeitspapier

This paper analyzes the contribution of the socioeconomic and demographic composition of the pool of employed and unemployed individuals to the dynamics of the labor market in different phases of the business cycle. Using individual level data from the Current Population Survey (CPS), we decompose differences in employment status transition rates between economic upswings and downturns into composition effects and behavioral effects. We find that overall composition effects play a minor role for the cyclicality of the unemployment outflow rate, although the contribution of the duration of unemployment is significant. In contrast, composition effects dampen the cyclicality of the unemployment inflow rate considerably. We further observe that the initially positive contribution of composition effects to a higher unemployment outflow rate turns negative over the course of the recession.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 6362

Classification and Topics

• Classification: Wirtschaft ; Labor Turnover; Vacancies; Layoffs ; Unemployment: Models, Duration, Incidence, and Job Search ; Labor Force and Employment, Size, and Structure ; Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
• Subject: gross worker flows ; unemployment duration ; decomposition analysis ; Blinder-Oaxaca ; Konjunkturelle Arbeitslosigkeit ; Arbeitslosigkeit ; Dauer ; Dekompositionsverfahren ; Schätzung ; Australien

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Bachmann, Ronald ; Sinning, Mathias
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2012

Further information

• Handle: http://hdl.handle.net/10419/58786
• URN: urn:nbn:de:101:1-201206125761
• Last update: 10.03.2025, 11:45 AM CET