Stephen R. G. Jones and W. Craig Riddell
February 1994
Revised October 1996
Final Revision February 1998
Abstract
Although the unemployment rate is one of the most widely cited
and closely monitored economic statistics, the definition and
measurement of unemployment remain controversial. An important
issue is whether non-employed persons who display a marginal
attachment to the labor force (for example, those who are
available for and desire work but are not searching for work)
should be classified as unemployed or non-participants.
Although this issue has been extensively debated, it has never been
tested empirically. This paper carries out empirical tests of this
and related hypotheses using a unique longitudinal data set
from Canada.
We find within the marginally attached
a "waiting" group whose behavior indicates that they would be
more appropriately classified as unemployed rather than
out-of-the-labor force.
The remainder of the marginally attached exhibit behavior
between that of the unemployed and the balance of non-participants,
suggesting that the desire for work among non-searchers
conveys substantial information about labor force attachment and
future employment status. Our methods also apply to heterogeneity
within the unemployed, and we investigate behavioural variation
linked to differences in job search methods and reasons for entry
into unemployment. Although those using "passive" job search
do exhibit behavior somewhat distinct from "active" searchers,
our results reject the practice of classifying passive job searchers
as out-of-the-labor force.
Overall, our results indicate that
the non-employed are very heterogeneous, so that any single
division into "unemployment" and "out-of-the-labor force" is
unlikely to fully capture the variety of degrees of labor
force attachment.
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