Unemployment Dynamics in the OECD

We provide a set of comparable estimates for the rates of inflowto and outflow from unemployment using publicly available data for fourteen OECD economies. Using a novel decomposition that allows for deviations of unemployment from its flowsteady state, we find that fluctuations in both inflowand outflowrates contribute substantially to unemployment variation within countries. Anglo-Saxon economies exhibit approximately a 15:85 inflow-outflow split to unemployment variation, while continental European and Nordic countries display closer to a 45:55 split. In all economies, increases in inflows lead increases in unemployment, whereas outflows lag a ramp-up in unemployment. © 2013 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology.