Measuring Labor-Force Participation and the Incidence and Duration of Unemployment

Hie Joo Ahn and James Hamilton
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Hie Joo Ahn: https://www.federalreserve.gov/econres/hie-joo-ahn.htm

No 2019-035, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: The underlying data from which the U.S. unemployment rate, labor-force participation rate, and duration of unemployment are calculated contain numerous internal contradictions. This paper catalogs these inconsistencies and proposes a reconciliation. We find that the usual statistics understate the unemployment rate and the labor-force participation rate by about two percentage points on average and that the bias in the latter has increased since the Great Recession. The BLS estimate of the average duration of unemployment overstates by 50% the true duration of uninterrupted spells of unemployment and misrepresents what happened to average durations during the Great Recession and its recovery.

Keywords: Labor-Force Participation Rate; Measurement Errors; Unemployment Duration; Unemployment Rate (search for similar items in EconPapers)
JEL-codes: C5 J6 (search for similar items in EconPapers)
Pages: 53 pages
Date: 2019-05-17
New Economics Papers: this item is included in nep-lab
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https://www.federalreserve.gov/econres/feds/files/2019035pap.pdf (application/pdf)

Related works:
Journal Article: Measuring Labor-Force Participation and the Incidence and Duration of Unemployment (2022)
Working Paper: Measuring Labor-Force Participation and the Incidence and Duration of Unemployment (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgfe:2019-35

DOI: 10.17016/FEDS.2019.035

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