Compositional Changes of the Labor Force and the Icrease of the Unemployment Rate: An Estimate for the United States

This article estimates how demographic changes in the composition of the labor force affect the unemployment rate in the United States. In addition to the effect from changes in the weights of the individual groups composing the total, the impact of compositional changes on the individual unemployment rates is estimated by using a dummy-variables model and incorporated into the estimate on the overall unemployment rate. The results suggest that the incorporation of the latter effect is significant. Indedd, the estimates presented in this article are almost twice as high as those provided by the fixed-weight method used in previous studies.