The Composition-Adjusted Unemployment Rate

The Economix blog is quite good (and not just because it mentioned me recently).  Today they highlight an interesting recent paper from the Federal Reserve Bank of Richmond, which attempts to create a measure of the unemployment rate holding the demographic characteristics of the workforce constant.  This is an interesting exercise, since it suggests that the aging of the workforce has been mechanically reducing the unemployment rate. 

An interesting research question is why the unemployment rate varies so much across the age distribution.  One way to proceed is to first try to understand how much of the demographic variation in the unemployment rate is due to supply and how much is due to demand -- i.e., is the high unemployment rate of teenagers primarily due to low demand for teenage labor or low attachment of teenagers to the labor force?  I have no idea.

Comments

[Michael Bolin]

I hope this is the first of many misspellings of your name in the NYT!