Unemployment, Participation and Worker Flows Over the Life-Cycle

Artículo de publicación ISIWe estimate life-cycle transition probabilities among employment, unemployment and inactivity for US workers. We assess the importance of each worker flow to account for participation and unemployment rates over the life cycle. We find that inactivity exit and entry matter but the empirically relevant margins defy conventional wisdom: high youth unemployment is due to high employment exit probabilities, while low labour force entry probabilities substantially account for low participation and unemployment among older workers. Our results remain intact under several forms of heterogeneity, time-aggregation bias and misclassification errors.Spanish Ministry of Economy and Competitiveness ECO2012-32392 Severo Ochoa Programme for Centres of Excellence in RD SEV-2011-0075 Fondecyt 1120593 1111045