COMPUTERIZATION AND RISING UNEMPLOYMENT DURATION

INTRODUCTION

It is widely recognized that in the industrialized economies there has been a dramatic rise in the average duration of unemployment during novel decades. Though it has been greatest in quantity severe during periods of high unemployment rates, plane at other times the longitudinal dimensions of time between jobs of an average unemploy worker has increased substantially. Here I present one such hypothesis, ascribing at least part of the phenomenon to the information technology "revolution," and provide empirical evidence for this propos explanation. I will argue here that when the rate of technical transformation is high, the average duration of unemployment is likely to rise. Moreover, the duration of unemployment is likely to increase relatively more for older workers than younger singles and for the poorly educated than those with more schooling.

While there is a voluminous literature upon causes of unemployment and the unemployment rate, there is a a great deal of smaller literature on technological factors that influence unemployment duration. For example, Richard Layard and Stephen Nickell, who have worked extensively upon unemployment issues, argued in a 1991 paper that the persistence of unemployment be pendents on the benefit and wage determination a whole s and also on the step of employment flexibility.

However, there are a brace of papers related to this subdue Aaronson and Housinger [1999] gazeed at the effects of of recent origin technology on the reemployment of displaced workers. They ground that increases in new technology, as measured by dint of R&D intensity and computer usage, decreased the likelihood of displaced workers finding fresh employment after being laid not upon Their results also indicated that the pair older and less skilled workers had greater difficulty finding a fresh job after displacement. Friedberg [2001] using data upon individual workers from the general Population Survey, concluded that impending retirement restores the incentive of older workers to acquire novel skills, particularly with regard to computer usage. Then using data from the Health and Retirement review Friedberg [2001] found that computer users retire later than nonusers. upon the basis of Instrumental Variables regression analysis, Friedberg [2001] estimated that computer use directly lowered the probability of retiring.

Section 1 will review the basic data upon unemployment duration for the United States. In section 21 will provide a rather elementary discussion, arguing that the introduction of a novel technological "regime" might increase search time for displaced workers. section 3 displays time trends and provides descriptive statistics upon the key variables of interest in the analysis. The fourth section provides an econometric investigation of the relation between computerization and the duration of unemployment Concluding remarks are provided in the fifth and final section.

It should be strained at the outset that in saying that duration of unemployment can be increased through a technology revolution as occasioned by means of the diffusion of information technology, I am not asserting that this is the alone source of that development. Clearly, duration is affected by the agency of many other influences-the structure of the unemployment insurance combination of parts to form a whole other elements of public policy, union power and behavior, international trade exhibitions and a profusion of others. The econometric investigation seeks to take account of of that kind variables, as well as measures of the spe of technical change. Its originates shed light on the character of these other variables and provide support for my hypothesis.

TREND IN THE DURATION OF UNEMPLOYMENT

With a given unemployment rate, duration of joblessnes can vary substantially. The unemployment rate will be the same if four million workers are unemploy for three month upon average, as when one million workers unloose their jobs for a filled year. Yet the consequences for the mental state of the race without jobs, for their behavior, and for the functioning of society are probably far more austere when the average period between piece of works is much longer.1

Before turning to the theory and empirical evidence upon our hypothesis, it is appropriate to review the evidence upon trends in the length of joblessnes allowing the information is well known to specialists. In the U the longitudinal dimensions of time a typical jobles someone spends "between jobs" has increased substantially and fairly steadily since World War II.2 Figure 1 summarizes data provided by dint of the Bureau of Labor Statistics for the U (see Table 1 for data sources and methods) It indicates that above the 49-year period from 1948 from one side 1997 the average duration of the period of unemployment has almost doubled. The share of the unemploy compos of somebodys jobless over 15 weeks more than doubled and the share unemploy half a year or more (the longest period overspreaded in the BLS data) has almost exactly tripled. There were substantial fluctuations in this turn A regression of the natural log of the data yields a growing rate of nearly 1 percent combineed for average duration of unemployment and an annual extension rate of 1.2 percent in the proportion of the unemploy who were jobles 15 weeks or more (see Figure 2) by the agency of 1997, the share of the unemploy who were jobles for more than 15 weeks reached above 30 percent of the total and those unemploy six month or more 16 percent of the total.