Unemployment Dynamics in the OECD

We provide a set of comparable estimates for the rates of inflow to and outflow from unemployment using publicly available data for fourteen OECD economies. Using a novel decomposition that allows for deviations of unemployment from its flow steady state, we find that fluctuations in both inflow and outflow rates con- tribute substantially to unemployment variation within countries. Anglo-Saxon economies exhibit approximately a 15:85 inflow/outflow split to unemployment variation, while Continental European and Nordic countries display closer to a 45:55 split. In all economies increases in inflows lead increases in unemployment, whereas outflows lag a ramp up in unemployment.