Cyclical Unemployment, Structural Unemployment

Cyclical Unemployment, Structural Unemployment

Whenever unemployment stays high for an extended period, it is common to see analyses, statements, and rebuttals about the extent to which the high unemployment is structural, not cyclical. This essay views the Beveridge curve pattern of unemployment and vacancy rates and the related matching function as proxies for the functioning of the labor market and explores issues in that proxy relations...

Separations, Sorting and Cyclical Unemployment

This paper establishes a new fact about the compositional changes in the pool of unemployed over the U.S. business cycle. Using micro-data from the Current Population Survey for the years 1962-2012, it documents that in recessions the pool of unemployed shifts towards workers with high wages in their previous job. These shifts are associated with both observed and unobserved factors in the wage...

Cyclical Unemployment: Sectoral Shifts or Aggregate Disturbances?

Optimal Unemployment Insurance and Cyclical Fluctuations

We study the design of optimal unemployment insurance in an environment with moral hazard and cyclical fluctuations. The optimal unemployment insurance contract balances the insurance motive to provide consumption for the unemployed with the provision of incentives to search for a job. This balance is affected by aggregate conditions, as recessions are characterized by reductions in job finding...

Unemployment Insurance Taxes and the Cyclical and Seasonal Properties of Unemployment

We combine Current Population Survey microdata for 1979-1987 with a newly assembled database of tax rates for the Unemployment Insurance system to measure the effects of imperfect experience-rating on temporary layoffs and other types of unemployment. We find a strong negative association between the degree of experience-rating and the rate of temporary layoff unemployment, with the largest eff...