Working Paper: NBER ID: w1436
Authors: James M. Poterba; Lawrence H. Summers
Abstract: This paper develops a procedure for adjusting the Current Population Survey gross changes data for the effects of reporting errors. The corrected data suggest that the labor market is much less dynamic than has frequently been suggested. Conventional measures sy understate the duration of unemployment by as much as eighty percent and overstate the extent of movement into and out ofthe labor force by several hundred percent. The adjusted data also throw demographic differences in patterns of labor market dynamics into sharp relief.
Keywords: Labor Market Dynamics; Reporting Errors; Unemployment Duration
JEL Codes: J64; C81
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| reporting errors (C83) | misclassification of labor market status (J46) |
| misclassification of labor market status (J46) | estimation of unemployment duration (J64) |
| reporting errors (C83) | estimation of unemployment duration (J64) |
| misclassification errors (C52) | overestimates of labor market flows (J60) |
| adjustment of gross flows data (F32) | more reliable picture of labor market dynamics (J60) |