A dominant trend in recent modeling of labor market fluctuations is to
treat unemployment inflows as acyclical. This trend has been encouraged
by recent influential papers that stress the role of longer unemployment
spells, rather than more unemployment spells, in accounting
for recessionary unemployment. After reviewing an empirical literature
going back several decades, we apply a convenient log change
decomposition to Current Population Survey data to characterize
rising unemployment in each postwar recession. We conclude that a
complete understanding of cyclical unemployment requires an explanation
of countercyclical inflow rates, especially for job losers (layoffs),
as well as procyclical outflow rates. (JEL E24, E32)
Elsby, Michael W. L., Ryan Michaels, and Gary Solon.
"The Ins and Outs of Cyclical Unemployment."
American Economic Journal: Macroeconomics,
Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital
Business Fluctuations; Cycles