The High-Pressure U.S. Labor Market of the 1990s

Princeton University Industrial Relations Working Paper No. 416

Posted: 3 Apr 2000

See all articles by Alan B. Krueger

Alan B. Krueger

Princeton University - Industrial Relations Section; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Lawrence F. Katz

Harvard University - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: July 22, 1999

Abstract

This paper examines the impact of selected labor market changes on the decline in the unemployment rate in the 1990s. The first section provides an overview of aggregate unemployment trends, inflation, and price and wage Phillips curves. The second section examines the effect of demographic changes on the unemployment rate. The third section examines the impact of the 150 percent increase in the number of men in jail or prison since 1985 on the unemployment rate. The fourth section examines the impact of evolving labor market intermediaries (namely worker profiling by the Unemployment Insurance system and the growth of the temporary help industry) on the unemployment rate. The fifth section explores whether worker bargaining power has become weaker, allowing for low unemployment and only modest wage pressure, because of worker job anxiety, the decline in union membership, or increased competitive pressures. The final section examines the impact of the tightest labor market in a generation on poverty. Our main findings are that changes in the age structure of the labor force, the growth of the male prison population, and, more speculatively, the rise of the temporary help sector, are the main labor market forces behind the low unemployment rate in the late 1990s.

JEL Classification: J60

Suggested Citation

Krueger, Alan B. and Katz, Lawrence F., The High-Pressure U.S. Labor Market of the 1990s (July 22, 1999). Princeton University Industrial Relations Working Paper No. 416. Available at SSRN: https://ssrn.com/abstract=172509

Alan B. Krueger (Contact Author)

Princeton University - Industrial Relations Section ( email )

Princeton, NJ 08544-2098
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National Bureau of Economic Research (NBER)

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Lawrence F. Katz

Harvard University - Department of Economics ( email )

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617-868-2742 (Fax)

HOME PAGE: http://www.economics.harvard.edu/faculty/katz/katz

National Bureau of Economic Research (NBER) ( email )

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