Decomposing the Ins and Outs of Cyclical Unemployment

Ronald Bachmann, Mathias Sinning

    Research output: Contribution to journalArticle

    Abstract

    This paper analyses the contribution of the composition of the pool of employed and unemployed individuals to labour market dynamics in different phases of the business cycle. Using individual-level data from the Current Population Survey (CPS), we decompose differences in employment status transition rates between upswings and downturns into explained and unexplained parts. We find that the duration of unemployment contributes to explaining unemployment outflows to employment and observe that its initially positive contribution turns negative in deep recessions. Composition effects play an important role for unemployment outflows to non-participation but dampen the cyclicality of unemployment inflows from employment.
    Original languageEnglish
    Pages (from-to)853-876
    JournalOxford Bulletin of Economics and Statistics
    Volume78
    Issue number6
    DOIs
    Publication statusPublished - 2016

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