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Unemployment, Participation and Worker Flows over the Life-Cycle

Research output: Contribution to journalArticle

Original languageEnglish
Pages (from-to)1705
Number of pages1733
JournalEconomic Journal
Volume125
Issue number589
DOIs
DatePublished - Dec 2015

Abstract

We estimate life-cycle transition probabilities among employment, unemployment and inactivity for U.S. workers. We assess the importance of each worker flow to account for participation and unemployment rates over the life-cycle. We find that inactivity exit and entry matter, but the empirically relevant margins defy conventional wisdom: high youth unemployment is due to high employment exit probabilities, while low labour force entry probabilities substantially account for low participation and unemployment among older workers. Our results remain intact under several forms of heterogeneity, time-aggregation bias, and misclassification errors.

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