Wednesday, July 15, 1998

Persons outside the labor force who want a job

Persons outside the labor force who want a job

by Monica D. Castillo
Although labor economists tend to focus on the activities and characteristics of persons in the labor force, there has been continued, if somewhat less visible, interest in the possible links to the job market of persons outside the labor force who want work but are not currently seeking a job. Data from the Current Population Survey (CPS) show that an average of 4.9 million nonparticipants reported that they wanted a job in 1997, representing about 7.4 percent of all persons outside the labor force. Persons making up this group—particularly "discouraged workers"—are of interest to labor market analysts and policymakers because they, like the unemployed, represent unused human resources in our economy. Moreover, information on the size, profile, and extent of subsequent labor force attachment of these nonparticipants who want a job is important to understand the nature of the total labor supply and to provide a complete measure of the slack or tightness of the labor market.

This article discusses the development of not-in-the-labor-force concepts used in the CPS, illustrating how the definitions have changed over time to reflect evolving notions about persons outside the labor force and their relationship to the labor force. Using classifications of nonparticipants based on definitions that were implemented as part of the 1994 redesign of the CPS, this article also examines the extent to which persons who had been outside the labor force and indicated that they wanted a job in 1994 became attached to the labor force a year later. The new measures were developed to more accurately and objectively identify those persons who might be considered to be most closely linked to the labor force as determined by factors such as their desire to work, availability for work, and recent job search activity. In addition, the analysis takes a look at whether specific groups of nonparticipants—particularly those defined as "discouraged workers"—in fact show a greater attachment to the labor force than had been shown under the prior definitions. Also considered is the degree to which subsequent labor force participation differs among the various subcategories of persons outside the labor force who said they wanted to work, and how the experience of such persons compares with that of persons who had been unemployed. In the concluding sections of the article, the influence of certain demographic, work history, and intention-to-work characteristics is studied to determine the extent to which these factors are predictors of subsequent labor market activity.

This excerpt is from an article published in the July 1998 issue of the Monthly Labor Review. The full text of the article is available in Adobe Acrobat's Portable Document Format (PDF).

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Saturday, July 6, 1996

More Sex Is Safer Sex: The economic case for promiscuity.

Slate columnist Steven E. Landsburg argued on July 6, 1996 in "More Sex Is Safer Sex: The economic case for promiscuity" that the societal risk of contracting a sexually transmitted disease would decline if more people were promiscuous:
It's true: AIDS is nature's awful retribution for our tolerance of immoderate and socially irresponsible sexual behavior. The epidemic is the price of our permissive attitudes toward monogamy, chastity, and other forms of sexual conservatism.

You've read elsewhere about the sin of promiscuity. Let me tell you about the sin of self-restraint.

Suppose you walk into a bar and find four potential sex partners. Two are highly promiscuous; the others venture out only once a year. The promiscuous ones are, of course, more likely to be HIV-positive. That gives you a 50-50 chance of finding a relatively safe match.

But suppose all once-a-year revelers could be transformed into twice-a-year revelers. Then, on any given night, you'd run into twice as many of them. Those two promiscuous bar patrons would be outnumbered by four of their more cautious rivals. Your odds of a relatively safe match just went up from 50-50 to four out of six.

That's why increased activity by sexual conservatives can slow down the rate of infection and reduce the prevalence of AIDS. In fact, according to Professor Michael Kremer of MIT's economics department, the spread of AIDS in England could plausibly be retarded if everyone with fewer than about 2.25 partners per year were to take additional partners more frequently. That covers three-quarters of British heterosexuals between the ages of 18 and 45. (Much of this column is inspired by Professor Kremer's research.)

If multiple partnerships save lives, then monogamy can be deadly. Imagine a country where almost all women are monogamous, while all men demand two female partners per year. Under those conditions, a few prostitutes end up servicing all the men. Before long, the prostitutes are infected; they pass the disease to the men; and the men bring it home to their monogamous wives. But if each of those monogamous wives was willing to take on one extramarital partner, the market for prostitution would die out, and the virus, unable to spread fast enough to maintain itself, might die out along with it.

Or consider Joan, who attended a party where she ought to have met the charming and healthy Martin. Unfortunately Fate, through its agents at the Centers for Disease Control, intervened. The morning of the party, Martin ran across one of those CDC-sponsored subway ads touting the virtues of abstinence. Chastened, he decided to stay home. In Martin's absence, Joan hooked up with the equally charming but considerably less prudent Maxwell--and Joan got AIDS. Abstinence can be even deadlier than monogamy.

If those subway ads are more effective against the cautious Martins than against the reckless Maxwells, then they are a threat to the hapless Joans. This is especially so when they displace Calvin Klein ads, which might have put Martin in a more socially beneficent mood.

You might object that even if Martin had dallied with Joan, he would only have freed Maxwell to prey on another equally innocent victim. To this there are two replies. First, we don't know that Maxwell would have found another partner: Without Joan, he might have struck out that night. Second, reducing the rate of HIV transmission is in any event not the only social goal worth pursuing: If it were, we'd outlaw sex entirely. What we really want is to minimize the number of infections resulting from any given number of sexual encounters; the flip side of this observation is that it is desirable to maximize the number of (consensual) sexual encounters leading up to any given number of infections. Even if Martin had failed to deny Maxwell a conquest that evening, and thus failed to slow the epidemic, he could at least have made someone happy.

To an economist, it's clear why people with limited sexual pasts choose to supply too little sex in the present: Their services are underpriced. If sexual conservatives could effectively advertise their histories, HIV-conscious suitors would compete to lavish them with attention. But that doesn't happen, because such conservatives are hard to identify. Insufficiently rewarded for relaxing their standards, they relax their standards insufficiently.

So a socially valuable service is under-rewarded and therefore under-supplied. This is a problem we've experienced before. We face it whenever a producer fails to safeguard the environment.

Extrapolating from their usual response to environmental issues, I assume that liberals will want to attack the problem of excessive sexual restraint through coercive regulation. As a devotee of the price system, I'd prefer to encourage good behavior through an appropriate system of subsidies.

The question is: How do we subsidize Martin's sexual awakening without simultaneously subsidizing Maxwell's ongoing predations? Just paying people to have sex won't work--not with Maxwell around to reap the bulk of the rewards. The key is to subsidize something that is used in conjunction with sex and that Martin values more than Maxwell.

Quite plausibly, that something is condoms. Maxwell knows that he is more likely than Martin to be infected already, and hence probably values condoms less than Martin does. Subsidized condoms could be just the ticket for luring Martin out of his shell without stirring Maxwell to a new frenzy of activity.

As it happens, there is another reason to subsidize condoms: Condom use itself is under-rewarded. When you use one, you are protecting both yourself and your future partners, but you are rewarded (with a lower chance of infection) only for protecting yourself. Your future partners don't know about your past condom use and therefore can't reward it with extravagant courtship. That means you fail to capture the benefits you're conferring, and as a result, condoms are underused.

It is often argued that subsidized (or free) condoms have an upside and a downside: The upside is that they reduce the risk from a given encounter, and the downside is that they encourage more encounters. But it's plausible that in reality, that's not an upside and a downside--it's two upsides. Without the subsidies, people don't use enough condoms, and the sort of people who most value condoms don't have enough sex partners.

All these problems--along with the case for subsidies--would vanish if our sexual pasts could somehow be made visible, so that future partners could reward past prudence and thereby provide appropriate incentives. Perhaps technology can ultimately make that solution feasible. (I envision the pornography of the future: "Her skirt slid to the floor and his gaze came to rest on her thigh, where the imbedded monitor read, 'This site has been accessed 314 times.' ") But until then, the best we can do is to make condoms inexpensive--and get rid of those subway ads.