EconPapers    
Economics at your fingertips  
 

The Effect of Shocks to Labour Market Flows on Unemployment and Participation Rates

Robert Dixon (), Guay Lim () and Jan van Ours ()

No 8221, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper presents an analysis of labour market dynamics, in particular of flows in the labour market and how they interact and affect the evolution of unemployment rates and participation rates, the two main indicators of labour market performance. Our analysis has two special features. First, apart from the two labour market states - employment and unemployment - we consider a third state - out of the labour force. Second, we study net rather than gross flows, where net refers to the balance of flows between any two labour market states. Distinguishing a third state is important because the labour market flows to and from that state are quantitatively important. Focussing on net flows simplifies the complexity of interactions between the flows and allows us to perform a dynamic analysis in a structural vector-autoregression framework. We find that a shock to the net flow from unemployment to employment drive the unemployment rate and the participation rate in opposite directions while a shock to the net flow from not in the labour force to unemployment drives the rates in the same direction.

Keywords: unemployment rate; net labour market flows; participation rate (search for similar items in EconPapers)
JEL-codes: E17 E24 J21 J64 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-lab, nep-lma and nep-mac
Date: 2014-05
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Published in: Applied Economics, 2015, 47 (24), 2523-2539

Downloads: (external link)
http://ftp.iza.org/dp8221.pdf (application/pdf)

Related works:
Journal Article: The effect of shocks to labour market flows on unemployment and participation rates (2015) Downloads
Working Paper: The Effect of Shocks to Labour Market Flows on Unemployment and Participation Rates (2014) Downloads
Working Paper: The Effect of Shocks to Labour Market Flows on Unemployment and Participation Rates (2014) Downloads
Working Paper: The Effect of Shocks to Labour Market Flows on Unemployment and Participation Rates (2014) Downloads
Working Paper: The Effect of Shocks to Labour Market Flows on Unemployment and Participation Rates (2014) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp8221

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().

 
Page updated 2019-09-16
Handle: RePEc:iza:izadps:dp8221