Accounting for Unemployment in the Great Recession: Nonparticipation Matters
28 Pages Posted: 16 Oct 2012
Date Written: June 5, 2012
We conduct an accounting exercise of the role of worker flows between unemployment, employment, and labor force nonparticipation in the dynamics of the aggregate unemployment rate across four recent recessions: 1982-1983, 1990-1991, 2001, and 2007-2009 (the Great Recession). We show that, whereas during earlier recessions it was sufficient to examine the flows between employment and unemployment to account for the dynamics of the unemployment rate, this was not true in the Great Recession. The increased importance of the flows between nonparticipation and unemployment is documented across all age and gender groups.
Keywords: Unemployment, Out of labor force, Nonparticipation, Great Recession
JEL Classification: J6, E24, E32
Suggested Citation: Suggested Citation