Working Paper: NBER ID: w13421
Authors: Robert Shimer
Abstract: This paper uses readily accessible data to measure the probability that an employed worker becomes unemployed and the probability that an unemployed worker finds a job, the ins and outs of unemployment. Since 1948, the job finding probability has accounted for three-quarters of the fluctuations in the unemployment rate in the United States and the employment exit probability for one-quarter. Fluctuations in the employment exit probability are quantitatively irrelevant during the last two decades. Using the underlying microeconomic data, the paper shows that these results are not due to compositional changes in the pool of searching workers, nor are they due to movements of workers in and out of the labor force. These results contradict the conventional wisdom that has guided the development of macroeconomic models of the labor market during the last fifteen years.
Keywords: No keywords provided
JEL Codes: J6; E24; E32
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| fluctuations in job finding probability (J69) | changes in unemployment rate (J64) |
| fluctuations in job finding probability (J69) | fluctuations in unemployment (J64) |
| transition rate from unemployment to employment (J68) | fluctuations in unemployment rate (J64) |
| employment exit probability (J63) | fluctuations in unemployment rate (J64) |