Title: Assessing state and national labor market conditions
Authors: Laura Jackson Young - Bentley University (United States) [presenting]
Kevin Kliesen - Federal Reserve Bank of St Louis (United States)
Michael Owyang - Federal Reserve Bank of St Louis (United States)
Abstract: Assessing the condition of the labor market is an important task in evaluating the overall state of the economy for both private decision-making and for policymaking. The labor market itself is a complex entity with workers flowing in and out of employment or participation, jobs being created and destroyed, and vacancies being posted and filled. A factor model was previously used to develop the Labor Market Conditions Index to summarize the common fluctuations in a vector of 19 national labor market indicators. However, labor markets tend to be regional entities with concentrated flows. This phenomenon was highlighted during the Great Recession when the economic downturn was accompanied by a housing downturn, making it difficult for workers to relocate to find new employment opportunities. Thus, it may also be important to analyze the fluctuations of local labor market variables and differentiate between large isolated fluctuations and large pervasive fluctuations affecting many different areas. We develop both national and state-level labor market indexes. The national index isolates and removes state-level fluctuations that are not pervasive---i.e., not occurring across many states simultaneously. We are also able to obtain state indexes that reflect the common movements of the panel of state-level labor market variables.