Whether PTER’s high level is a cyclical or a structural phenomenon is the research question. To make this distinction, this paper will investigate the extent to which the current high level in PTER has occurred either because of a rise in the number of workers who have flowed into this situation because of a change in labor force status, or because it now takes longer to transition out of PTER.
To answer this question, I will use information contained in the Bureau of Labor Statistic’s (BLS’s) Current Population Survey (CPS). The CPS is a monthly survey consisting of 8 rotation groups (subsamples). Each rotation group is interviewed for four consecutive months, followed by an eight-month hiatus, and then interviewed again for another four consecutive months. Given this sample design, for any given month, four of the eight rotation groups were also interviewed 12 months earlier.
My sample pertains to these four rotation-groups. To be more precise, I created a sample made up of individuals who remained in the same household when interviewed in both the earlier and latter periods. This sample spans from May 2005 through June 2016 and includes information about these individuals from both periods.
Using this sample, I will be able to ascertain whether the inflows into PTER (those who were PTER in the latter period but not in the earlier period) have returned to the level they were at prior to the Great Recession. Likewise, I will also test to determine whether the outflows from PTER (those who were PTER in the earlier period but are employed full-time 12 months later) is at a lower level than it was prior to the Great Recession.
[1] In December 2007 the number of people counted as being unemployed for economic reasons was 4,750. The current level is as of October 2016 is 5,889.