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April 1995, Vol. 118, No. 4
Anthony J. Barkume and Francis W. Horvath
D uring the 1990-92 period, the unemployment rate rose sharply, growth in employment came to a standstill, and the labor force participation rate stopped its long-term upward trend and began to fluctuate widely. On occasions when both labor force participation and unemployment rise, are these events attributable to a greater influx of jobseekers from outside the labor force, or reduced exits from the labor force?
To answer this question, the gross flows statistical series provides a way to examine, for example, how many workers enter or leave the labor force or move from employment to unemployment. Gross flows statistics stem from the limited longitudinal character of the Current Population Survey (CPS) in that they are generated from successive reports of labor force status from the same respondents.
However, some factors can create bias in gross flows statistics, preventing direct reconciliation with official CPS labor force statistics. No one technique has been proposed to simultaneously account for all major sources of potential errors in the gross flow data.1 To help analyze labor force developments that emphasize market flows,2 many labor force experts and official review official commissions have called for the Bureau of the Census and the Bureau of Labor Statistics to improve and publish the gross flow statistics.
This excerpt is from an article published in the April 1995 issue of the Monthly Labor Review. The full text of the article is available in Adobe Acrobat's Portable Document Format (PDF). See How to view a PDF file for more information.
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1 Many problems have been reduced with the implementation of the new data collection system of the CPS design.
2 For a recent statement for the logic of this point of view, see Olivier J. Blanchard and Peter Diamond, "The Flow Approach to Labor Markets," American Economic Review, May 1992, pp. 354-59
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