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Discouraged Workers and Economic Fluctuations

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  • T. Aldrich Finegan

Abstract

This article examines recent trends and cyclical changes in the number of discouraged workers and other persons outside the labor force who report wanting regular jobs. Both the incidence of discouragement and its sensitivity to labor market conditions vary widely across demographic groups. The number of persons discouraged for job-market reasons has shown marked cyclical swings, but not the number discouraged for personal reasons. The findings illumine one of the social costs of a slack economy and are relevant to the continuing controversy over the classification of discouraged workers as not in the labor force. The author also shows that recent pro-cyclical swings in the size of the labor force are much larger than can be accounted for by the entry and withdrawal of discouraged workers. He suggests that many persons who decide to enter the labor force when unemployment is low are not reported as discouraged workers—or even as wanting jobs—when unemployment is high.

Suggested Citation

  • T. Aldrich Finegan, 1981. "Discouraged Workers and Economic Fluctuations," ILR Review, Cornell University, ILR School, vol. 35(1), pages 88-102, October.
    • Handle: RePEc:sae:ilrrev:v:35:y:1981:i:1:p:88-102
    DOI: 10.1177/001979398103500108
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    Cited by:

    1. Szabó, Zsolt, 2019. "Elbátortalanodott hiteligénylők a vállalati szektorban [Discouraged borrowers in the corporate sector]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(11), pages 1145-1186.
    2. Chakravarty, Sugato & Xiang, Meifang, 2013. "The international evidence on discouraged small businesses," Journal of Empirical Finance, Elsevier, vol. 20(C), pages 63-82.
    3. Kollmann, Robert, 1994. "Hidden unemployment a search-theoretic interpretation," Economics Letters, Elsevier, vol. 46(4), pages 351-355, December.
    4. Boyd Hunter & Matthew Gray, 2004. "Further investigations into Indigenous labour supply: what discourages discouraged workers?," Labor and Demography 0407005, University Library of Munich, Germany.
    5. Gábor R., István, 1998. ""Reményvesztett dolgozók" a fejlett piacgazdaságban [Hopeless workers" in the developed market economie]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(4), pages 370-378.
    6. Jeremy Schwartz, 2019. "The Job Search Intensity Supply Curve: How Labor Market Conditions Affect Job Search Effort," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 45(2), pages 269-300, April.
    7. Cörvers,Frank & Golsteyn,Bart, 2003. "Changes in women's willingness to work in a tightening labour market: the impact of preferences, wages and individual characteristics," ROA Research Memorandum 005, Maastricht University, Research Centre for Education and the Labour Market (ROA).
    8. Sugato Chakravarty & Tansel Yilmazer, 2009. "A Multistage Model of Loans and the Role of Relationships," Financial Management, Financial Management Association International, vol. 38(4), pages 781-816, December.

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