Assessing the Change in Labor Market Conditions
Hess Chung (),
Bruce Fallick (),
Christopher Nekarda () and
David Ratner ()
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Hess Chung: Board of Governors of the Federal Reserve System (U.S.), http://www.federalreserve.gov/econresdata/hess-t-chung.htm
David Ratner: Board of Governors of the Federal Reserve System (U.S.), http://www.federalreserve.gov/econresdata/david-d-ratner.htm
No 2014-109, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (US)
This paper describes a dynamic factor model of 19 U.S. labor market indicators, covering the broad categories of unemployment and underemployment, employment, workweeks, wages, vacancies, hiring, layoffs, quits, and surveys of consumers' and businesses' perceptions. The resulting labor market conditions index (LMCI) is a useful tool for gauging the change in labor market conditions. In addition, the model provides a way to organize discussions of the signal value of different labor market indicators in situations when they might be sending diverse signals. The model takes the greatest signal from private payroll employment and the unemployment rate. Other influential indicators include the insured unemployment rate, consumers' perceptions of job availability, and help-wanted advertising. Through the lens of the LMCI, labor market conditions have improved at a moderate pace over the past several years, albeit with some notable variation along the way. In addition, from t he perspective of the model, the unemployment rate declined a bit faster over the past two years than was consistent with the other indicators.
Keywords: LMCI; U.S. labor market; dynamic factor model; employment; unemployment rate (search for similar items in EconPapers)
JEL-codes: E24 E66 J20 J60 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-lab, nep-lma and nep-mac
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Working Paper: Assessing the Change in Labor Market Conditions (2015)
Working Paper: Assessing the Change in Labor Market Conditions (2014)
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