The Evolution of Unemployment in the United States: 1968-1985

Unemployment rates in the United States and other Western economies have shown a pronounced secular increase over the past twenty years. This article studies the determinants of unemployment dynamics in the United States since 1968. The primary goal is to document the empirical facts about the evolution of unemployment that theory must accommodate. Our key empirical findings are in four areas: (1) The secular increase in unemployment in the United States is surprisingly evenly distributed across subcategories of the labor force, including industries, regions, and demographic groups; (2) Most of the increase is accounted for by a pronounced shift toward long-term unemployment; (3) Based on the observed characteristics of workers, the occurrence of unemployment is now much more evenly distributed than it was in the recent past; (4) Interindustry mobility and fluctuations in the pace of labor reallocation among sectors have played only minor roles in affecting observed unemployment. These points challenge theories that rely on the characteristics or fortunes of particular sectors of the economy to generate unemployment. The main factors influencing unemployment over this period have been economywide and broadly based.