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Adjusting the Gross Changes Data: Implications for Labor Market Dynamics

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  • James M. Poterba
  • Lawrence H. Summers

Abstract

This paper develops a procedure for adjusting the Current Population Survey gross changes data for the effects of reporting errors. The corrected data suggest that the labor market is much less dynamic than has frequently been suggested. Conventional measures sy understate the duration of unemployment by as much as eighty percent and overstate the extent of movement into and out ofthe labor force by several hundred percent. The adjusted data also throw demographic differences in patterns of labor market dynamics into sharp relief.
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Suggested Citation

  • James M. Poterba & Lawrence H. Summers, 1984. "Adjusting the Gross Changes Data: Implications for Labor Market Dynamics," Working papers 351, Massachusetts Institute of Technology (MIT), Department of Economics.
    • Handle: RePEc:mit:worpap:351
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    References listed on IDEAS

    as
    1. Kim B. Clark & Lawrence H. Summers, 1979. "Labor Market Dynamics and Unemployemnt: A Reconsideration," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 10(1), pages 13-72.
    2. Hall, Robert E., 1979. "A theory of the natural unemployment rate and the duration of employment," Journal of Monetary Economics, Elsevier, vol. 5(2), pages 153-169, April.
    3. Stephen T. Marston, 1976. "Employment Instability and High Unemployment Rates," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 7(1), pages 169-210.
    4. Abowd, John M & Zellner, Arnold, 1985. "Estimating Gross Labor-Force Flows," Journal of Business & Economic Statistics, American Statistical Association, vol. 3(3), pages 254-283, June.
    5. Akerlof, George A & Main, Brian G M, 1980. "Unemployment Spells and Unemployment Experience," American Economic Review, American Economic Association, vol. 70(5), pages 885-893, December.
    6. James M. Poterba & Lawrence H. Summers, 1983. "Survey Response Variation in the Current Population Survey," NBER Working Papers 1109, National Bureau of Economic Research, Inc.
    7. Stephen W. Salant, 1977. "Search Theory and Duration Data: A Theory of Sorts," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 91(1), pages 39-57.
    8. Lancaster, Tony, 1979. "Econometric Methods for the Duration of Unemployment," Econometrica, Econometric Society, vol. 47(4), pages 939-956, July.
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    Cited by:

    1. Michael R. Darby & John C. Haltiwanger & Mark W. Plant, 1986. "The Ins and Outs of Unemployment: The Ins Win," NBER Working Papers 1997, National Bureau of Economic Research, Inc.
    2. James W. Shockey, 1988. "Adjusting for Response Error in Panel Surveys," Sociological Methods & Research, , vol. 17(1), pages 65-92, August.

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