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Job polarization and the natural rate of unemployment in the United States

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  • Tüzemen, Didem

Abstract

I present a new estimate of the natural rate of unemployment in the United States that accounts for changes in the age, gender, and skill composition of the labor force. Using micro-level data from the Current Population Survey for the period 1994–2017, I find that the natural rate of unemployment has declined by 0.5 percentage point since 1994 and was 4.5% at the end of 2017. My projections show that ongoing demographic and technological changes could lower the trend rate further to 4.4% by the end of 2022.

Suggested Citation

  • Tüzemen, Didem, 2019. "Job polarization and the natural rate of unemployment in the United States," Economics Letters, Elsevier, vol. 175(C), pages 97-100.
    • Handle: RePEc:eee:ecolet:v:175:y:2019:i:c:p:97-100
    DOI: 10.1016/j.econlet.2018.12.011
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    References listed on IDEAS

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    1. Daniel Aaronson & Luojia Hu & Arian Seifoddini & Daniel G. Sullivan, 2015. "Changing Labor Force Composition and the Natural Rate of Unemployment," Chicago Fed Letter, Federal Reserve Bank of Chicago.
    2. David H. Autor & Lawrence F. Katz & Melissa S. Kearney, 2006. "The Polarization of the U.S. Labor Market," American Economic Review, American Economic Association, vol. 96(2), pages 189-194, May.
    3. Acemoglu, Daron & Autor, David, 2011. "Skills, Tasks and Technologies: Implications for Employment and Earnings," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 12, pages 1043-1171, Elsevier.
    4. Didem Tuzemen & Jonathan L. Willis, 2013. "The vanishing middle: job polarization and workers’ response to the decline in middle-skill jobs," Economic Review, Federal Reserve Bank of Kansas City, vol. 98(Q I), pages 5-32.
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    More about this item

    Keywords

    Natural rate of unemployment; Job polarization; Labor demand; Skills; Aging;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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