72nd International Atlantic Economic Conference

October 20 - 23, 2011 | Washington, USA

Labor market flows and unemployment over the business cycle: Evidence from BLS flows data

Friday, 21 October 2011: 8:30 AM
Joseph S. Falzone, Ph.D. , Economics, Peirce College, Philadelphia, PA
Objectives:  The objective of this paper is to investigate labor market flows of men and women over the period 1990 to 2011.  A comparison of labor market flows can shed light on changes on the compositional changes of the labor force for men and women, providing evidence on the sources of employment growth and unemployment especially during periods of recession (1991, 2001, 2008-09).  Analysis of gross flows can provide a more detailed picture of labor market "churning" for workers who move between various labor market statuses as well as a clearer picture of the numerous jobs that routinely appear and disappear.

Data and Methods:  Data are extracted from the Bureau of Labor Statistics based on the Current Population Survey (CPS) conducted by the Bureau of Census.  In order to capture the dynamic aspects of the labor force the BLS estimates labor force gross flows from a sample of approximately 60,000 households to produce a seasonally adjusted time series for each month from January 1990 to March 2011.  These data include the number of individuals (total, men, and women) who are "employed", "unemployed", or "not in the labor force".  These data are available for individuals age 16 and over and are separated for men and women.

Expected Results:   Analysis of gross flows data over the period will provide insight into the changing labor market statuses of both men and women.  As the labor force participation rate of women grows and as women become more firmly attached to the labor force I expect labor market flows of men and women to mirror each other as data are analyzed over the past 2 decades.  Differences may be explained by disparities between occupations and/or industries for between men and women.

Discussion:  For most of the 20th century the labor force participation rate of women increased with the pace accelerating in the 1970s.  The consequences have been an increase in the labor force participation rate of the population as a whole and the concomitant decrease in the labor force participation rate of men during the same time.  We find too lower rates of unemployment for women than for men during periods of economic contraction during the last 2 recessions.  Unemployment rates based as they are on stocks of the unemployed fail to capture the dynamic state of the labor market where individuals move into and out of various labor market statuses; that is, employed, unemployed, not in the labor force.  Gross Flow Data provides a more detailed understanding of how the labor market operates especially as it responds to changes over the business cycle.