Working Papers

2017-20 | September 2017

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Measuring Heterogeneity in Job Finding Rates among the Non-Employed Using Labor Force Status Histories

Author(s):

We introduce a novel approach to studying heterogeneity in job finding rates by classifying the non-employed, the unemployed and those out of the labor force (OLF), according to their labor force status (LFS) histories using four-month panels in the CPS. Respondents’ LFS histories outperform current-month responses to survey questions about duration and reason for unemployment, desire to work, or reasons for not searching in predicting future employment. We find that the best predictor of future employment for the non-employed is their duration since last employment. For those OLF, the duration since last employment is only available via LFS histories and cannot be inferred from current-month responses. Those who were recently employed are twice as likely to find a job as those who report wanting a job. For the unemployed, the duration since last employment is a better predictor of future employment than the self-reported duration of unemployment is, as the two duration measures often disagree. The disagreement is not caused by classification error but rather arises because self-reported durations reflect individuals’ in short-term jobs either temporarily suspending their search or continuing search while working. Recent employment breaks negative duration dependence in unemployment exits and the unemployed who report long durations after recent employment have similar job finding rates as those who report short durations. Using our proposed approach, we reexamine the unemployment duration distribution and current approach to misclassification error in the CPS.

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Article Citation

Kudlyak, Marianna, and Fabian Lange. 2017. "Measuring Heterogeneity in Job Finding Rates among the Non-Employed Using Labor Force Status Histories," Federal Reserve Bank of San Francisco Working Paper 2017-20. Available at https://doi.org/10.24148/wp2017-20