Net Flows in the U.S. Labor Market, 1990-2010: Except in the Most Recent Recession, Net Flows Were from Unemployment to Employment (Even in Previous Recessions), from Employment to Not in the Labor Force (Even in Booms), and from Not in the Labor Force to Unemployment; Changes in the Unemployment Rate across Subperiods Varied Chiefly with the Size of the Netflow between Employment and Unemployment

By Dixon, Robert; Freebairn, John et al. | Monthly Labor Review, February 2011 | Go to article overview

Net Flows in the U.S. Labor Market, 1990-2010: Except in the Most Recent Recession, Net Flows Were from Unemployment to Employment (Even in Previous Recessions), from Employment to Not in the Labor Force (Even in Booms), and from Not in the Labor Force to Unemployment; Changes in the Unemployment Rate across Subperiods Varied Chiefly with the Size of the Netflow between Employment and Unemployment


Dixon, Robert, Freebairn, John, Lim, Guay C., Monthly Labor Review


This article presents a simple framework for the systematic investigation of the relationship between net (and gross) flows among different labor market states and movements in the unemployment rate. The framework is then used to investigate the behavior of net flows of persons among employment, unemployment, and departure from the labor force (not in the labor force) in the United States over the 1990-2010 period. Understanding this behavior increases economists' understanding of the progression of unemployment over the business cycle and aids in identifying the characteristics that make the most recent recession different from previous ones. (1) The article contributes to the literature on gross flows (2) and flow probabilities among various labor market states by investigating net flows between states over long periods.

Stock-consistent worker flow data

The data that follow on worker flows are derived from the Current Population Survey (cps), a monthly sample survey of approximately 60,000 households that is carried out by the U.S. Census Bureau for the U.S. Bureau of Labor Statistics (BLS, the Bureau). Each month, the cps is administered to about three-quarters of the households that also were in the survey during the previous month. This month-to-month overlap allows the Bureau to track individuals who change their labor force status from one month to the next. In any given month, a person is in one of three labor force states: employed (E), unemployed (U), or not in the labor force (N). The next month, the person either remains in the same state or changes to one of the other two states. Changes (flows) are denoted by pairs of letters; the first letter indicates the labor force status of an individual in the previous month, and the second letter indicates the state of the same individual in the current month. Thus, there are six possible flows associated with changing states: EU, EN, UE, UN, NE, and NU. The Bureau makes available seasonally adjusted monthly estimates of these flows (also known as "gross flows") back to 1990. Although data on the six flows have been available from the cps for some time, discrepancies existed between the labor force stock changes implied by the flows and the net changes derived from the reported monthly stock estimates. Recently however, BLS researchers developed methods for reconciling the flows and the stock data; consequently, it is these stock-consistent data that are used in this article. (3)

The unemployment rate from 1990 to 2010

The unemployment rate is defined as the ratio of the number of unemployed to the total labor force. Chart 1 shows the trend in the unemployment rate from February 1990 to June 2010. The three recessions which occurred during that period are clearly visible, as are the recoveries from the first two recessions and the beginning of the recovery from the most recent recession. The analysis that follows examines the similarities and differences among selected subperiods, with an eye toward determining whether any systematic patterns are associated with periods of rising unemployment. Because the raw data on flows are extremely "noisy," averages of (monthly) seasonally adjusted data are presented for meaningful comparisons.

Several subperiods can be identified in the chart, based on the turning points in the unemployment rate. First, the aforementioned three recessions are clearly identifiable, defined for the purposes of this article as periods during which the unemployment rate was rising in a sustained fashion. (4) These recessions may

be dated as having occurred over the periods June 1990 to June 1992, January 2001 to June 2003, and April 2007 to October 2009.5 The periods between the recessions (July 1992 to December 2000 and July 2003 to March 2007) and after October 2009 can be thought of as economic recovery periods, although the most recent one should be regarded as not yet completed (indicated in note 1 in the tables that follow). …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Net Flows in the U.S. Labor Market, 1990-2010: Except in the Most Recent Recession, Net Flows Were from Unemployment to Employment (Even in Previous Recessions), from Employment to Not in the Labor Force (Even in Booms), and from Not in the Labor Force to Unemployment; Changes in the Unemployment Rate across Subperiods Varied Chiefly with the Size of the Netflow between Employment and Unemployment
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.