NEW YORK—The New York Fed’s Liberty Street Economics blog today begins a seven part series exploring factors affecting major labor market indicators recently and the differences from past behavior. The series also discusses the possible implications of these developments for the labor market going forward. The series goes beyond a narrow focus on the unemployment rate, discussing a number of other labor market indicators and their usefulness in assessing the health of the labor market.
In today’s post, New York Fed economists Jonathan McCarthy and Simon Potter develop a simple framework to demonstrate the relationship between the unemployment rate, labor force participation rate, and the employment-to-population ratio. The authors then outline some of the series themes and provide a brief summary of conclusions reached.
The next six posts will run over the next five business days and examine, in order:
- The usefulness of a common economist’s tool, Okun’s law, to forecast the unemployment rate;
- The impact of flows—the movement of workers into and out of unemployment during a given timeframe—on the unemployment rate;
- The role of skills mismatch, particularly for construction workers, in keeping the unemployment rate elevated;
- The history of the Bureau of Labor Statistics and its efforts to measure economic activity;
- The importance of labor market participation and nonparticipation, especially among women, on movements of the unemployment rate; and
- The possible magnitude of a decline in the unemployment rate if the current expansion lasts as long as any of the three most recent expansions.
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About Liberty Street Economics:
Liberty Street Economics is a blog operated by the New York Fed’s Research and Statics Group. The blog allows New York Fed’s economists to share their research and analysis on current issues and to engage in a direct dialogue with a broad online audience. Posts on Liberty Street Economics cover topics ranging from finance and monetary policy to the regional economy and other timely issues. The views expressed in the blog are those of the author(s), and do not necessarily reflect the position of the Federal Reserve Bank of New York or the Federal Reserve System.