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Board of Governors of the Federal Reserve System (US)
Finance and Economics Discussion Series
Temporary employment and the natural rate of unemployment
Maria Ward Otoo
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.


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Maria Ward Otoo, Temporary employment and the natural rate of unemployment, Board of Governors of the Federal Reserve System (US), Finance and Economics Discussion Series 1999-66, 1999.
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Keywords: Unemployment ; Temporary employees ; Labor market
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