Comments and Discussion

Lawrence F. Katz:

Chinhui Juhn, Kevin Murphy, and Robert Topel have produced an insightful and informative extension into the 1990s of their earlier important work on the evolution of joblessness among U.S. prime-aged males. Their earlier study documented a large increase in the non-employment rate of prime-aged males from 1967 to 1989, concentrated among low-skilled (low-wage) workers and in long-term spells of joblessness.¹ Increases in the shares of men classified as unemployed and as out of the labor force contributed to this rise in the nonemployment rate. The authors concluded that a secular decline in the demand and labor market opportunities for low-skilled males was the driving force behind rising U.S. male nonemployment in the 1970s and 1980s.

In their new work, the authors find that some of the earlier trends continued into the 1990s and some did not. The share of prime-aged men not participating in the labor force continued to rise in the 1990s. The large reduction in unemployment in the 1990s for prime-aged men was completely offset by this increase in nonparticipation, so that the overall non-employment rate for these men did not decline from the late-1980s business-cycle peak to the 1999-2000 peak. The rise in prime-aged male nonparticipation is concentrated in full-year nonemployment, and those listing illness or disability as the main reason for nonemployment account for a large share of the growth in male labor force nonparticipation (0.8 percentage point of a 1.5-percentage-point increase from 1988-89 to 1999-2000).

On the other hand, the authors document that the rise in nonemployment among low-skilled men (those in the bottom 40 percent of the wage distribution) of the 1970s and 1980s stopped and may even have reversed itself in the 1990s. But nonemployment and nonparticipation continued to rise for men in the top half of the wage distribution. And the trend of large reductions in the real wages of low-skilled men stopped: these men saw real wage increases in the second half of the 1990s. Thus the 1990s expansion generated less inequality in labor market outcomes for prime-aged males than the experiences of the 1970s and 1980s.

The authors call their paper "Current Unemployment, Historically Contemplated." A wordier but more appropriate title would be "Almost Current U.S. Prime-Aged Civilian Noninstitutional Male Unemployment, Contemplated through the Lens of the March Current Population Surveys." One reason is that the authors limit their analysis to prime-aged U.S. males (which they define as those with one to thirty years of potential experience) and focus on the information available in the March Current Population Survey (CPS) through calendar year 2000. Prime-aged males are indeed a key labor force group, but women and older workers (those with more than thirty years of potential experience) have become increasingly important labor force participants in recent years. In addition, their analysis is not fully "current," because it does not include the most recent recession. Furthermore, the use of the March CPS limits the analysis to the civilian noninstitutional population and thus fails to capture a major component of the rise in male nonemployment: the massive increase in U.S. incarceration rates over recent decades. The CPS does not include institutionalized groups (such as those held in state and federal prisons and in jails). Finally, the paper addresses only employment in the United States; some useful perspective on U.S. employment patterns could be gained through comparisons with other major developed economies.

The inclusion of other important labor force groups (women and older males) in the analysis, and comparison of the U.S. experience with that of other economies of the Organization for Economic Cooperation and Development (OECD), would generate a somewhat more positive overall assessment of U.S. employment performance over the full period studied by the authors, and especially the 1990s. U.S. female unemployment has declined and converged with male unemployment: there has been no rise in the unemployment rate for prime-aged females despite a more than [End Page 118...