TY  - JOUR
AU  - Shimer,Robert
TI  - Reassessing the Ins and Outs of Unemployment
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 13421
PY  - 2007
Y2  - September 2007
UR  - http://www.nber.org/papers/w13421
L1  - http://www.nber.org/papers/w13421.pdf
N1  - Author contact info:
Robert Shimer
Department of Economics
University of Chicago
1126 East 59th Street
Chicago, IL 60637
Tel: 773/702-9015
E-Mail: shimer@uchicago.edu
AB  - This paper uses readily accessible data to measure the probability that an employed worker becomes unemployed and the probability that an unemployed worker finds a job, the ins and outs of unemployment. Since 1948, the job finding probability has accounted for three-quarters of the fluctuations in the unemployment rate in the United States and the employment exit probability for one-quarter. Fluctuations in the employment exit probability are quantitatively irrelevant during the last two decades. Using the underlying microeconomic data, the paper shows that these results are not due to compositional changes in the pool of searching workers, nor are they due to movements of workers in and out of the labor force. These results contradict the conventional wisdom that has guided the development of macroeconomic models of the labor market during the last fifteen years.
ER  -