Reassessing the Ins and Outs of Unemployment

Robert Shimer

No 13421, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper uses readily accessible data to measure the probability that an employed worker becomes unemployed and the probability that an unemployed worker finds a job, the ins and outs of unemployment. Since 1948, the job finding probability has accounted for three-quarters of the fluctuations in the unemployment rate in the United States and the employment exit probability for one-quarter. Fluctuations in the employment exit probability are quantitatively irrelevant during the last two decades. Using the underlying microeconomic data, the paper shows that these results are not due to compositional changes in the pool of searching workers, nor are they due to movements of workers in and out of the labor force. These results contradict the conventional wisdom that has guided the development of macroeconomic models of the labor market during the last fifteen years.

JEL-codes: E24 E32 J6 (search for similar items in EconPapers)
Date: 2007-09
New Economics Papers: this item is included in nep-dge, nep-lab and nep-mac
Note: EFG LS
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Citations: View citations in EconPapers (251)

Published as Robert Shimer, 2012. "Reassessing the Ins and Outs of Unemployment," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 15(2), pages 127-148, April.

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Journal Article: Reassessing the Ins and Outs of Unemployment (2012)
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