Skip to main content

On the measurement of unemployment

Abstract

This paper investigates how alternative measures of unemployment may be derived from information on unemployment duration. It begins by listing various properties that unemployment indices should satisfy, and shows how ‘duration profiles’ can usefully represent unemployment data. Theorem 1 establishes that unemployment indices are unanimous iff the duration profiles do not intersect. Two families of unemployment indices are examined in detail. Both allow unemployment to be decomposed across population subgroups. In addition, they can be expressed as the product of three components reflecting the contributions of the unemployment rate, mean unemployment duration, and differences in duration among the unemployed.

This is a preview of subscription content, access via your institution.

References

  1. 1.

    Aczel, J.: Lectures on Functional Equations and Their Applications. Academic, New York (1966)

    Google Scholar 

  2. 2.

    Akerlof, G.A., Main, B.G.M.: Unemployment spells and unemployment experience. Am. Econ. Rev. 70, 885–893 (1980)

    Google Scholar 

  3. 3.

    Akerlof, G.A., Main, B.G.M.: An experience-weighted measure of employment and unemployment duration. Am. Econ. Rev. 71, 1003–1011 (1981)

    Google Scholar 

  4. 4.

    Atkinson, A.B.: On the measurement of inequality. J. Econ. Theory. 2, 244–263 (1970)

    Article  Google Scholar 

  5. 5.

    Clark, K.B., Summers, L.H.: Labor market dynamics and unemployment: a reconsideration. Brookings Pap. Econ. Act. 1, 13–72 (1979)

    Article  Google Scholar 

  6. 6.

    Cowell, F.A., Kuga, K.: Additivity and the entropy concept: an axiomatic approach to inequality measurement. J. Econ. Theory. 25, 131–143 (1981)

    Article  Google Scholar 

  7. 7.

    Disney, R.: Recurrent spells and the concentration of unemployment in Great Britain. Econ. J. 89, 109–119 (1979)

    Article  Google Scholar 

  8. 8.

    Foster, J.E., Shorrocks, A.F.: Poverty orderings and welfare dominance. Soc. Choice Welf. 5, 179–188 (1988)

    Article  Google Scholar 

  9. 9.

    Hurd, M.: A compensation measure of the cost of unemployment to the unemployed. Q. J. Econ. 94, 225–243 (1980)

    Article  Google Scholar 

  10. 10.

    Kaitz, H.B.: Analyzing the length of spells of unemployment. Mon. Labor Rev. 93, 11–20 (1970)

    Google Scholar 

  11. 11.

    Paul, S.: An illfare approach to the measurement of unemployment. Appl. Econ. 24, 739–743 (1992)

    Article  Google Scholar 

  12. 12.

    Marshall, A.W., Olkin, I.: Inequalities: Theory of Majorization and Its Applications. Academic, New York (1979)

    Google Scholar 

  13. 13.

    Salant, S.W.: Search theory and duration data: a theory of sorts. Q. J. Econ. 91, 39–57 (1977)

    Article  Google Scholar 

  14. 14.

    Sen, A.K.: Poverty: an ordinal approach to measurement. Econometrica 44, 219–231 (1976)

    Article  Google Scholar 

  15. 15.

    Sen, A.K.: Issues in the measurement of poverty. Scand. J. Econ. 81, 285–307 (1979)

    Article  Google Scholar 

  16. 16.

    Sengupta, M.: Unemployment Duration and the Measurement of Unemployment. Mimeo, University of Canterbury, New Zealand (1990)

    Google Scholar 

  17. 17.

    Shorrocks, A.F.: The class of additively decomposable inequality measures. Econometrica 48, 613–625 (1980)

    Article  Google Scholar 

  18. 18.

    Shorrocks, A.F.: Ranking income distributions. Economica 50, 3–17 (1983)

    Article  Google Scholar 

  19. 19.

    Shorrocks, A.F.: Inequality decomposition by population subgroups. Econometrica 52, 1369–1385 (1984)

    Article  Google Scholar 

  20. 20.

    Shorrocks, A.F.: Spell Incidence, Spell Duration and the Measurement of Unemployment. J. Econ. Inequal. (2008, in press). doi:10.1007/s10888-008-9090-3

Download references

Author information

Affiliations

Authors

Corresponding author

Correspondence to Anthony Shorrocks.

Rights and permissions

Reprints and Permissions

About this article

Cite this article

Shorrocks, A. On the measurement of unemployment. J Econ Inequal 7, 311–327 (2009). https://doi.org/10.1007/s10888-008-9089-9

Download citation

Keywords

  • Unemployment
  • Duration
  • Indices
  • Incidence