Decomposing the Ins and Outs of Cyclical Unemployment

Ronald Bachmann and Mathias Sinning ()

No 6362, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: 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.

Keywords: unemployment duration; gross worker flows; decomposition analysis; Blinder-Oaxaca (search for similar items in EconPapers)
JEL-codes: E24 J21 J63 J64 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2012-02
New Economics Papers: this item is included in nep-lab
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Citations: View citations in EconPapers (18)

Published - published in: Oxford Bulletin of Economics and Statistics, 2016, 78 (6), 853-876

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Related works:
Journal Article: Decomposing the Ins and Outs of Cyclical Unemployment (2016)
Working Paper: Decomposing the Ins and Outs of Cyclical Unemployment (2012)
Working Paper: Decomposing the Ins and Outs of Cyclical Unemployment (2011)
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