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September 2005, Vol. 128, No. 9
Analyzing CPS data using gross flows
Randy Ilg
Each month, the Bureau of Labor Statistics (BLS) publishes estimates of employment and unemployment derived from the Current Population Survey (CPS). These measures are highly scrutinized by business economists, policy analysts, and financial investors for information about the state of the labor market.
The published labor force data show the net change in the number of employed or unemployed persons (the stocks) over any given time period. The specific sources of the net change, however, are not discernible from the published data because there is a significant amount of "churning" as individuals move from one labor force status to another. These dynamic "gross flows" underlie the net changes in the labor force measures. Researchers from the BLS Office of Employment and Unemployment Statistics recently developed several new seasonally-adjusted gross-flow series. The improved gross flow data provide the necessary linkage between stocks and flows and, therefore, may prove useful in analyzing movements in labor force measures.
This article provides some background and conceptual information on the new gross-flow series. (A more complete description is provided in an accompanying article in this issue.1) In addition, it demonstrates some uses of the gross-flow series by examining changes in various labor force stock measures and reconciling those movements with the seasonally adjusted gross-flow series over selected time periods.
The gross-flow data presented in this article support information collected in other BLS surveys; during the recession, flows out of employment were greater than flows into employment.2 Indeed, the decline in the employment-population ratio during the past two labor market downturns reflected increased flows out of employment, rather than reduced flows into employment. The data also show that the jobless rate appeared to be more sensitive to the pace of rising or declining flows into unemployment, rather than to changes in the level of flows out of unemployment.
This excerpt is from an article published in the September 2005 issue of the Monthly Labor Review. The full text of the article is available in Adobe Acrobat's Portable Document Format (PDF). See How to view a PDF file for more information.
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Footnotes
1
See Harley J. Frazis, Edwin L. Robison, Thomas D. Evans, and
Martha A. Duff, "Estimating gross flows consistent with stocks in the
CPS," pp. 3–9, for additional information on methodology, measurement
concepts, limitations, and seasonal adjustment.
2 For example, data collected in the Bureau’s Business Employment Dynamics (BED) program showed that substantial increases in gross job losses were accompanied by declining gross job gains during the recent recession.
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