On the importance of the participation margin for labor market fluctuations

A-Tier
Journal: Journal of Monetary Economics
Year: 2015
Volume: 72
Issue: C
Pages: 64-82

Score contribution per author:

1.341 = (α=2.01 / 3 authors) × 2.0x A-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

Conventional analyses of labor market fluctuations ascribe a minor role to labor force participation. We show, by contrast, that flows-based analyses imply that the participation margin accounts for around one-third of unemployment fluctuations. A novel stock-flow apparatus establishes these facts, delivering three further contributions. First, the role of the participation margin appears robust to adjustments for spurious transitions induced by reporting error. Second, conventional stocks-based analyses are subject to a stock-flow fallacy, neglecting offsetting forces of worker flows on the participation rate. Third, increases in labor force attachment among the unemployed during recessions are a leading explanation for the role of the participation margin.

Technical Details

RePEc Handle
repec:eee:moneco:v:72:y:2015:i:c:p:64-82
Journal Field
Macro
Author Count
3
Added to Database
2026-01-25