MEASURING THE DURATION OF UNEMPLOYMENT: A NOTE
| Author | Richard Layard |
| DOI | http://doi.org/10.1111/j.1467-9485.1981.tb00092.x |
| Published date | 01 November 1981 |
| Date | 01 November 1981 |
Scottish
JOIUMI
ofPolitical
Economy,
Vol.
28,
No.
3,
November 1981
0
1981 Longmao
Group
Limited 003&9292/81/00210273
S02.00
Notes
and
Communications
MEASURING THE DURATION
OF
UNEMPLOYMENT: A NOTE
RICHARD LAYARD
Centre for Labour Economics, London School
of
Economics
In a number of recent articles Akerlof and Main have used a novel method of
measuring the duration
of
unemployment.’ According to them the most
relevant approach
is
to focus on those now unemployed (the
stock),
and to
compute how long on average these people will have been out of work before
they eventually stop being unemployed. They contrast this measure in
particular with the approach that became fashionable in the early
1970s,
which
focuses on theflow of persons becoming unemployed, and calculates how long
on average these people will have been out of work before they eventually stop
being unemployed. In this note I shall reject both these approaches and argue
that by far the most interesting statistic is the one that has been around since
unemployment statistics began. This concentrates, like Akerlof and Main, on
the
stock
of the unemployed but asks simply how long on average these
persons have been unemployed
so
far
(not how long they will eventually have
been unemployed). The traditional statistic is the most relevant, whether one is
concerned with positive aspects
of
unemployment
or
with the “normative”
evaluation of its cost.
I
POSITIVE
ANALYSIS
The positive question is
:
Why do we have the stock of unemployment which
we have? The “new view” of unemployment focused essentially on the
statistical (steady-state) identify
Stock
=
Flow
x
Expected duration of those flowing
in.
The idea was that one could explain the stock if one could explain the two
right-hand terms.
It
turned out that expected duration was
fairly
short
(in
1972-77,
seven weeks on average for
U.S.
males and
13
weeks for British
See
for
example
G.
Akerlof, “The case against conservative macro-economics”,
Econornica,
Aug. 1979, and B. Main, “The length
of
employment and unemployment in Great Britain”,
Scottish
Journal
of
Political
Economy,
June 1981.
Date
of
receipt
of
final manuscript: 12 January 1981.
273
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