Unemployment and Nonemployment: Heterogeneities in Labor Market States

Stephen R. G. Jones and W. Craig Riddell

The Review of Economics and Statistics, 2006, vol. 88, issue 2, 314-323

Abstract: The determination of how to distinguish between unemployment and nonparticipation is important and controversial. The conventional approach employs a priori reasoning together with self-reported current behavior. This paper employs an evidence-based classification of labor force status using information about the consequences of the behavior of the nonemployed. We find that marginal attachment-defined as desiring work, although not searching-is a distinct labor market state, lying between those who do not desire work and the unemployed. Furthermore, important heterogeneities exist within these nonemployment states. Two subsets of nonparticipants-both engaged in waiting-display behavior similar to the unemployed. Copyright by the President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Date: 2006
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Working Paper: Unemployment and Non-Employment: Heterogeneities in Labour Market States (2002)
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