Temporary Employment and the Natural Rate of Unemployment

18 Pages Posted: 21 May 2000

See all articles by Maria Ward Otoo

Maria Ward Otoo

Board of Governors of the Federal Reserve System

Date Written: December 1999

Abstract

This paper examines the determinants of the natural rate of unemployment using a combined cross section and time series data set. The results suggest that industry composition affects the natural rate. In particular, a higher share of temporary employment in a local labor market tends to lower the natural rate of unemployment -- most likely through the matching function. The results suggest that the increase in the share of temporary employment may have reduced the natural rate as much as 1/4 percentage point. The results also indicate that unemployment insurance benefits tend to boost the natural rate, while having a more highly educated work force tends to lower it. However, the degree of union presence in a local labor market had little impact on the natural rate.

Keywords: natural rate, temporary employment, matching function

JEL Classification: E24, J24

Suggested Citation

Ward Otoo, Maria, Temporary Employment and the Natural Rate of Unemployment (December 1999). Available at SSRN: https://ssrn.com/abstract=209028 or http://dx.doi.org/10.2139/ssrn.209028

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Board of Governors of the Federal Reserve System ( email )

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