An Analysis of Unemployment Across Industrial Sectors, 1965–1977

Abstract

The purpose of this paper is to analyze the nature and impact of unemployment using a model that disaggregates the U.S. economy ac? cording to industrial sectors. Unemployment is a human problem, and to varying degrees it has been a national concern. Society's con? cern for unemployment appears to depend on the level of unemploy? ment experienced. The decade of the 1930's, with its extremely high average rates of unemployment, left a deep impression on all capital? ist societies. After World War II there was concern that unemploy? ment would return to prewar levels. Due to such factors as pent-up demand, the recovery in Europe, and the start of the cold war, the unemployment rate did not move towards the Depression levels, but instead, the rate declined to average 4.51% in the 1950's. In the 1960's the average unemployment rate moved slightly higher to 4.98%. The U.S. experience in the 1970's was somewhat disappointing, with the rate of unemployment averaging 6.23% up to 1978. A deficiency in the unemployment literature had been the absence of disaggregation in the analysis. Robert Gordon was the first to begin a detailed analysis of disaggregated data. Gordon has analyzed unemployment with respect to age, sex, color and various other breakdowns. [See Gordon.] Gordon has developed a dispersion index to evaluate the incidence of unemployment. [Gordon, Chapters 5 8c 6] This paper will also use a disaggregate approach and concentrate on a breakdown according to industrial sectors. This paper will not use Gordon's dispersion index, but instead, a measure of cyclical sensi? tivity of industrial employment classifications. The impact of unemployment is not similar across the industrial sectors of the U.S. economy. The most striking contrast would be to