The increased role of flows between nonparticipation and unemployment during the Great Recession and recovery

Labor market research often focuses on transition rates between employment and unemployment without analyzing the effects of transition rates into and out of the labor force. Current Population Survey data permit analysis of transition rates among all three labor force statuses. A study at the Richmond Fed examines the role of labor force participation in the dynamics of the aggregate unemployment rate across the four most recent recessions. This research finds an increased role for transition rates between nonparticipation and unemployment during the Great Recession and recovery.