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State Employment Gap and Job Polarization

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Even as the unemployment rate is back down to normal levels, the labor market is still not fully healed. Decreased labor force participation rates and those stuck in part-time jobs remain problems in the U.S. and across nearly all states. The Total Employment Gap combines these measures into one metric to gauge the health of the economy. Just 7 of the 50 states are at full employment in early 2015.

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State Employment Gap and Job Polarization

  1. 1. 1 State Labor Market Slack and Job Polarization Oregon Office of Economic Analysis
  2. 2. Alabama Alaska Arizona State Total Employment Gap Employment Gap Comparison Job Polarization Comparison
  3. 3. Arkansas California Colorado State Total Employment Gap Employment Gap Comparison Job Polarization Comparison
  4. 4. Connecticut Delaware Florida State Total Employment Gap Employment Gap Comparison Job Polarization Comparison
  5. 5. Georgia Hawaii Idaho State Total Employment Gap Employment Gap Comparison Job Polarization Comparison
  6. 6. Illinois Indiana Iowa State Total Employment Gap Employment Gap Comparison Job Polarization Comparison
  7. 7. Kansas Kentucky Louisiana State Total Employment Gap Employment Gap Comparison Job Polarization Comparison
  8. 8. Maine Maryland Mass. State Total Employment Gap Employment Gap Comparison Job Polarization Comparison
  9. 9. Michigan Minnesota Mississippi State Total Employment Gap Employment Gap Comparison Job Polarization Comparison
  10. 10. Missouri Montana Nebraska State Total Employment Gap Employment Gap Comparison Job Polarization Comparison
  11. 11. Nevada New Hampshire New Jersey State Total Employment Gap Employment Gap Comparison Job Polarization Comparison
  12. 12. New Mexico New York North Carolina State Total Employment Gap Employment Gap Comparison Job Polarization Comparison
  13. 13. North Dakota Ohio Oklahoma State Total Employment Gap Employment Gap Comparison Job Polarization Comparison
  14. 14. Oregon Penn. Rhode Island State Total Employment Gap Employment Gap Comparison Job Polarization Comparison
  15. 15. South Carolina South Dakota Tennessee State Total Employment Gap Employment Gap Comparison Job Polarization Comparison
  16. 16. Texas Utah Vermont State Total Employment Gap Employment Gap Comparison Job Polarization Comparison
  17. 17. Virginia Washington West Virginia State Total Employment Gap Employment Gap Comparison Job Polarization Comparison
  18. 18. 18 Wisconsin Wyoming State Total Employment Gap Employment Gap Comparison Job Polarization Comparison
  19. 19. 19 Oregon Office of Economic Analysis Methodology The state level Total Employment Gap measure is based on Andrew Levin’s work at the IMF and Dartmouth. It combines the unemployment gap, the labor force participation gap and the underemployment gap to gauge how far the labor market is from full employment. Available data at the state level is not identical to the U.S. overall. While the specifics do differ between these estimates and Dr. Levin’s, the broader trends and calculations are similar. Unemployment Gap: Calculate the average difference in unemployment rates between each individual state and the U.S. over the 1990 to 2006 time period. Add this average difference to the Congressional Budget Office’s estimate for NAIRU to obtain a state level NAIRU estimate. The unemployment gap is the difference between the state’s actual unemployment rate and this state level NAIRU. Participation Gap: Create a state demographically-adjusted labor force participation rate. Fix age cohort LFPR at 2000 rates and apply these fixed rates over time to the changing demographic/population figures by state. Since population figures are available annually, convert annual data to monthly or quarterly using a frequency conversion (e.g. Eviews.) The participation gap is the difference between the actual LFPR and the demographically-adjusted series. Underemployment: Calculate those working part-time for economic reasons as share of the labor force. Average the 2005-07 values; this is an estimate of PT for economic reasons at full employment. Calculate the difference between actual PT for economic reasons as share of the labor force and the 2005-07 average. Divide by 2 to estimate full- time equivalent positions.
  20. 20. 20 Oregon Office of Economic Analysis Contact www.OregonEconomicAnalysis.com @OR_EconAnalysis joshua.lehner@oregon.gov (503) 378-4052

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