The purpose of this paper is to demonstrate that a more accurate method exists to produce estimates of unemployed entrants into the labor force than the one currently used. Unemployed entrants are an important component in the estimation methodology for unemployment estimates and the unemployment rate at sub-state levels. The current methodology in use to estimate entrants dates back to the early 1980’s and does not accurately reflect labor market trends.
Accuracy of the unemployment statistics is important at sub-state levels because they are one of the few economic indicators available for counties and cities. The Federal government uses these unemployment statistics to allocate funding for various entitlements and assistance programs. In fiscal year 2001, over $25 billion in federal funds were distributed based on these estimates.
Entrants are individuals who enter the labor force for the first time, or after an absence of a year or more. Individuals who are considered entrants include those who have recently completed military service, family responsibilities, education, and other reasons. If they cannot find work, they are considered unemployed if they are able and willing to work and meet job search criteria as specified by state law. What makes these individuals different from other unemployed persons is that they often have had no previous work experience before their current spell of unemployment. If the individual had held a job for at least a year prior to becoming unemployed, they would most likely have qualified to receive unemployment compensation through their state and thus would be counted in the Unemployment Insurance (UI) system. Since entrants are not documented in the UI system, the counts of unemployed entrants into the labor force must be estimated each month.
Before delving further into the current methodology used to estimate unemployed entrants in the labor force, some definitions must be discussed to familiarize the reader with the terminology and concepts used in labor force estimation. These terms and their definitions are standard concepts from the Current Population Survey (CPS). The CPS is a household survey that is the source for all national labor force data. The CPS is conducted monthly and reflects activities that occurred in the week that includes the 12 th of the month (the reference week). All other labor force estimates produced for the state and sub-state levels use the same standard CPS concepts to be comparable to the CPS.
Contents
Abstract
Dedication
List of Tables
List of Charts
List of Equations
Introduction
Estimation Background
Overview of Current Methodology Entrants
Inconsistencies with Current Methodology
Data Availability
Entrants/Population Model
Model Testing
Application of the Model
Implications of Results
References
Glossary
Vita
Download
Estimating Unemployed Entrants Into The Labor Force
