Studies in the dynamics of unemployment

Sammanfattning: From chapter 1: The point of departure for the collection of studies presented in the following is the message delivered by American economists during the beginning of the 70’s that a proper understanding of the unemployment problem requires a dynamic view of the labor market in general and unemployment in particular. The "dynamic view" should emphasize the flows into and out of unemployment. By analyzing these flows a better understanding should be obtained of (i) the causes of unemployment and (ii) the welfare consequences of unemployment. The first study, presented in Chapter 2, aims at giving an empirical picture of "the dynamics of unemployment" in Sweden. Several decompositions of unemployment, which highlight the causes and welfare implications of unemployment, are made. In Chapter 3 one possible explanation to the longer unemployment spells during the seventies is examined, namely the unemployment benefits which were extended in different ways for different groups both in 1968 and in 1974. The analytical approach in the chapter is to analyze the "surviving rates" of the unemployed, i.e. the probability of remaining unemployed from one period (quarter) to the next. In Chapter 4 the same analytical approach is applied to the analysis of the cyclical fluctuations of unemployment spells. The search theoretic literature has suggested two different explanations of these cyclical fluctuations; one has emphasized the importance of inflationary surprises and the other the quantity-rationing constraints facing the unemployed. The empirical importance of these comparative explanations are analyzed using Swedish and U.S. data. A model of the "transition rate" for the unemployed, which captures both mechanisms, is specified. The study in Chapter 5 aims at giving an improved empirical picture of unemployment as a welfare and distributional problem. The first issue analyzed is whether unemployment has deleterious effects on individuals’ subsequent labor market prospects, in particular the subsequent wage level. The second issue analyzed is whether unemployment tends to hit the relatively low-paid in the labor force. The issue whether unemployment duration rather than the stock of unemployed should be the guideline for labor market policy is also discussed in the chapter. In Chapter 6, finally, some important topics for future research in this field are dicussed.