Changes in Unemployment Duration and Labor Force Attachment

This paper accounts for the observed increase in unemployment duration relative to the unemployment rate in the U.S. over the past thirty years, typified by the record low level of short-term unemployment. We show that part of the increase is due to changes in how duration is measured, a consequence of the 1994 Current Population Survey redesign. Another part is due to the passage of the baby boomers into their prime working years. After accounting for these shifts, most of the remaining increase in unemployment duration relative to the unemployment rate is concentrated among women, whose unemployment rate has fallen sharply in the last two decades while their unemployment duration has increased. Using labor market transition data, we show that this is a consequence of the increase in women’s labor force attachment. ∗We are grateful to Giuseppe Bertola, Robert Solow, David Weiman, and participants in the Sustainable Employment Initiative conference for their comments and to Fran Horvath, Randy Ilg, Rowena Johnson, Bob McIntire, and Anne Polivka at the Bureau of Labor Statistics (BLS) for their help compiling the data. Ron Tucker of the Census Bureau and Clyde Tucker of the BLS provided useful information concerning the Current Population Survey redesign. Joydeep Roy provided valuable research assistance. Shimer acknowledges financial support from National Science Foundation grant SES-0079345 and the hospitality of the University of Chicago while part of this paper was written. Please address correspondence to [email protected].