Accounting for Unemployment in the Great Recession: Nonparticipation Matters

28 Pages Posted: 16 Oct 2012

See all articles by Marianna Kudlyak

Marianna Kudlyak

Federal Reserve Bank of San Francisco

Felipe F. Schwartzman

Federal Reserve Banks - Federal Reserve Bank of Richmond

Date Written: June 5, 2012

Abstract

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

Kudlyak, Marianna and Schwartzman, Felipe F., Accounting for Unemployment in the Great Recession: Nonparticipation Matters (June 5, 2012). Federal Reserve Bank of Richmond Working Paper No. 12-04, Available at SSRN: https://ssrn.com/abstract=2162668 or http://dx.doi.org/10.2139/ssrn.2162668

Marianna Kudlyak (Contact Author)

Federal Reserve Bank of San Francisco ( email )

101 Market Street
San Francisco, CA 94105
United States

Felipe F. Schwartzman

Federal Reserve Banks - Federal Reserve Bank of Richmond ( email )

P.O. Box 27622
Richmond, VA 23261
United States

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