free script provided by
|
Who Counts as Unemployed?
Octobmer 18, 2004
Andrew Samwick (via Brad DeLong) posts on the definition of "discouraged" workers versus unemployed workers. Rather than copy the relevant text, I thought I would summarize the findings thus:- To be classified as unemployed, a person would have not had any employment during the survey reference week, and
- have been available for work (except for temporary illness), and have made specific efforts to find employment sometime during the 4-week period ending with the reference week, OR
- have been waiting to be recalled to a job from which they had been furloughed.
Discouraged workers are not in the labor force, but have looked for employment in the last 12 months. I mention this in passing because it seems a common diversion to dispute the meaning of unemployment statistics. If there is a significant increase in the number of discouraged workers, then the unemployment rate may indeed be in decline. A commentor, Ryan Early, mentions his own predicament as one who "dropped out" of the impacted labor market to get a graduate degree.
Commnets, Vox Bax: However, ...I should not be categorized as "want a job now." I have undertaken a serious new endeavor (going back to school to get a bachelor's degree in economics with the intent to go on to graduate school) and am taking on a hardship to achieve this new goal (student loans). As such, if a new job in my previously chosen career was offered to me tomorrow I would not take it. I have committed to this new path. Thus under the BLS categorizations I am simply "Not In Labor Force."
Now whether the number of people who are in similar situations is large enough to impact the aggregate unemployment statistics I think is highly questionable. This is very specific criteria we're looking at: unvoluntarily unemployed, looked for a set period of time, left the workforce, and would not take a job now. I think a much larger group would be people who were let go (or told that lay-offs were approaching), took a look at the tough job market, and decided to go back to school without even looking for a new job. Applications at business schools, law schools, and the like have seen a spike over the past four years, and I think this is the obvious explanation. Incidentally, Mr. Early's web log is really excellent—I just became aware of it and I was really impressed by how much I learned in the little amount of time it took me to read it. So I'm adding his site to the web logs of distinction.
The BLS link that Prof. Samwick proffered explains the definitions used in great detail. There was one more thing I was a little curious about: trends in college pricing (PDF; statistics courtesy of the College Board). Most of the meat is on page 8 of the file, which I've reproduced in the graph below.
This immediately requires one to furnish trends in income based on degree earned. Wayne Pafko (2000) has a pretty good listing with US Census Data (see also here). Contrast this to these graphs furnished by the National Center for Education Statistics (NCES) showing trends in college-aged populations
. One way of reading these three charts is to imagine the conjuction of downward-sloping demand curves and upward-sloping sloping curves:
Point A represents the initial price and delivery of tuition; point B represents the position if demand increases (as a result of either an increase in the population or in the proportion of the population requiring college education).
As we see, there is a gentle sag in enrollments during the mid-1990's. C represents an increase demand and a leftward shift in the supply curve (caused by a reduction in state subsidies for education, accompanied by an increase in the cost of administering that education). This would be consistent with a boom in wages, an increased opportunity cost for remaining in school (rather than in the job market), but also a leftward movement in the supply curve for education.
What we see is that demand has indeed shifted rightward, but the precipitous upward movement in prices cannot reflect merely that, can it? The upward movement in prices would need to be accompanied by an increase in the 1st derivative of enrollment during the mid-1990's, which hasn't occurred.
This is what I mean. It seems plausible to suspect that Mr. Early's predicament is a common one as students like himself crowd universities seeking the optimal utilization of these lean years.
|
