Are unemployment and out of the labor force behaviorally distinct labor force states?

Abstract

This paper uses the J-test developed by Mackinnon et al. (1983) and US Gross Change Data for six age-sex demographic groups to test the hypothesis that unemployment and out of the labor force are behaviorally meaningless distinctions. Results obtained with these data and test confirm those obtained by Flinn and Heckman (1983). We found that for young (ages 16–19) and young adult (ages 20–24) males and females, the two states are distinct; whereas for prime age males and females (ages 25–44), this distinction is meaningless.