Date of Award

5-2020

Level of Access

Open-Access Thesis

Degree Name

Master of Science (MS)

Department

Economics

Advisor

Andrew Crawley

Second Committee Member

Julieta Yung

Third Committee Member

Angela Daley

Abstract

The first section of this research explores how traditional measures of unemployment can mask important changes in the labor market across the business cycle. We therefore use broader definitions of unemployment to estimate time-varying job-matching efficiency rates that are consistent with vacancies and hiring activity data for the U.S. Our efficiency rates are then modeled along with employment data to study their dynamic, non-linear relationship. We find that including part-time workers for economic reasons as well as marginally attached workers helps explain the changes in employment patterns observed after the global financial crisis, emphasizing the importance of accounting for underemployment, particularly in the last decade.

The second section of this research conducts a preliminary analysis of a new coincident and leading composite index following the structural changes inflicted on the economy after the great recession. Since the recession, many critical aspects of the economy have changed; from interest rates near the zero lower bound, record low levels of unemployment, falling labor force participation, and stagnant inflation and wages. This paper takes a novel approach by including the match efficiency parameter as a leading indicator to incorporate a broader view of the labor market. We find that including the match efficiency with other more established indicators improves the composite index.

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