Smith, Jennifer C. (2010) The ins and outs of UK unemployment. Working Paper. Coventry: University of Warwick. Dept. of Economics. (Warwick economics research paper series (TWERPS), Vol.2010).

PDF WRAP_Smith_twerp_944.pdf - Requires a PDF viewer such as GSview, Xpdf or Adobe Acrobat Reader Download (852Kb)

Abstract

This paper shows that in the UK, increases in unemployment in a recession are driven by rises in the separation rate. A new decomposition of unemployment dynamics is devised that does not require unemployment to be in steady state at all times. This is important because low UK transition rates – one quarter the size of the US –imply substantial deviation of unemployment from steady state near cyclical turning points. In periods of moderation, the job finding rate is shown to have most influence on UK unemployment dynamics. Evidence comes from the first study of monthly data derived from individuals’ labour market spells recorded in the British Household Panel Survey from 1988 to 2008.

Item Type:	Working or Discussion Paper (Working Paper)
Subjects:	H Social Sciences > HD Industries. Land use. Labor
Divisions:	Faculty of Social Sciences > Economics
Library of Congress Subject Headings (LCSH):	Unemployment -- Great Britain, Labor market -- Great Britain -- Mathematical models, Labor market -- Great Britain -- Statistics
Series Name:	Warwick economics research paper series (TWERPS)
Publisher:	University of Warwick. Dept. of Economics
Place of Publication:	Coventry
Date:	2010
Volume:	Vol.2010
Number:	No.944
Status:	Not Peer Reviewed
Access rights to Published version:	Open Access
Funder:	Economic and Social Research Council (Great Britain) (ESRC)
References:	Abowd, John and Arnold Zellner (1985), “Estimating gross labor force flows”, Journal of Business and Economic Statistics, 3 (3) 254-83. Barnichon, Regis (2009), “Vacancy posting, job separation and unemployment fluctuations”, Working Paper, Federal Reserve Board. Burgess, Simon and Helen Turon (2005). “Unemployment dynamics in Britain”, Economic Journal, 115 (503) 423-448. Elias, Peter (1996), “Who forgot they were unemployed?”, University of Warwick Institute for Employment Research Working Paper (December). Elsby, Michael W, Ryan Michaels and Gary Solon (2009), “The ins and outs of cyclical unemployment”, American Economic Journal: Macroeconomics, 1 (1) 84-110. Elsby, Michael W, Bart Hobijn and Aysegul Sahin (2008), “Unemployment dynamics in the OECD”, NBER Working Paper 14617. Elsby, MichaelW, Jennifer C Smith and JonathanWadsworth (2010), “The role of inflows and outflows in the dynamics and distribution of unemployment”, unpublished paper. Fujita, Shigeru and Gary Ramey (2006), “The cyclicality of job loss and hiring”, Federal Reserve Bank of Philadelphia Working Paper 06-17. Fujita, Shigeru and Gary Ramey (2009), “The cyclicality of separation and job finding rates”, International Economic Review, 50 (2) 415-430. Gali, Jordi and Olivier Blanchard (2008), “Labor markets and monetary policy: a New-Keynesian model with unemployment”, NBER Working Paper W13897. Gertler, Mark and Antonella Trigari (2009), “Unemployment fluctuations with staggered Nash wage bargaining”, Journal of Political Economy, 117 (1) 38-86. Gomes, Pedro (2009), “Labour market flows: facts from the UK”, Working Paper, London School of Economics. Hall, Robert E (2005), “Employment efficiency and sticky wages: evidence from flows in the labor market”, Review of Economics and Statistics, 297 (3) 397-407. Karagiannaki, Eleni (2007), “Exploring the effects of integrated benefit systems and active labour market policies: evidence from Jobcentre Plus in the UK”, Journal of Social Policy, 36 (2) 177-195. Manning, Alan (2009), “You can’t always get what you want: the impact of the UK Jobseeker’s Allowance”, Labour Economics, 16 (3) 239-250. Nekarda, Christopher J (2009), “Understanding unemployment dynamics: the role of time aggregation”, Working Paper, Federal Reserve Board of Governors. Paull, Gillian (2002), “Biases in the reporting of labour market dynamics”, Institute for Fiscal Studies Working Paper WP02/10. Petrongolo, Barbara (2009), “The long-term e¤ects of job search requirements: evidence from the UK JSA reform”, Journal of Public Economics, 93 (11-12) 1234- 1253. Petrongolo, Barbara and Christopher A Pissarides (2008), “The ins and outs of European unemployment”, American Economic Review, 98 (2) 256-262. Poterba, James M and Lawrence H Summers (1986), “Reporting errors and labor market dynamics”, Econometrica, 54 (6) 1319-1338. Shimer, Robert (2005), “The cyclical behavior of equilibrium unemployment and vacancies”, American Economic Review, 95 (1) 25-49. Shimer, Robert (2007), “Reassessing the ins and outs of unemployment”, NBER Working Paper 13421. Taylor, Marcia Freed (ed) with John Brice, Nick Buck and Elaine Prentice-Lane (2010), British Household Panel Survey User Manual Volume A: Introduction, Technical Report and Appendices, Colchester: University of Essex. Yashiv, Eran (2007), “US labor market dynamics revisited”, Scandinavian Journal of Economics, 109 (4) 779-806.
URI:	http://wrap.warwick.ac.uk/id/eprint/3504

Request changes to a record

Actions (login required)

View Item