Temporary employment and the natural rate of unemployment
Abstract: This paper examines the determinants of the natural rate of unemployment using a combined cross section and time series data set. The results suggest that industry composition affects the natural rate. In particular, a higher share of temporary employment in a local labor market tends to lower the natural rate of unemployment--most likely through the matching function. The results suggest that the increase in the share of temporary employment may have reduced the natural rate as much as 1/4 percentage point. The results also indicate that unemployment insurance benefits tend to boost the natural rate, while having a more highly educated work force tends to lower it. However, the degree of union presence in a local labor market had little impact on the natural rate.
File(s): File format is text/html http://www.federalreserve.gov/pubs/feds/1999/199966/199966abs.html
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Part of Series: Finance and Economics Discussion Series
Publication Date: 1999