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Labor market indicators are critical for policymakers, but measurement error in labor force survey data is known to be substantial. In this paper, I quantify the implications of classification errors in the U.S. Current Population Survey (CPS), in which respondents misreport their true labor force status. Once I correct for measurement error using a latent variable approach, the unemployment rate is on average 0.8 percentage points (ppts) higher than the official unemployment rate, with a maximum of 2.0 ppts higher between 1996 and 2018. This paper further quantifies the contributions to business-cycle fluctuations in the unemployment rate from job separation, job finding, and participation. Correcting for misclassification changes previous studies' results about the contributions of these transition probabilities: job separation accounts for more of the unemployment fluctuations, while participation accounts for fewer. The methodology I propose can be applied to any other labor force survey in which labor force status is observed for three periods.

Labor --- Employment --- Unemployment --- Wages --- Intergenerational Income Distribution --- Aggregate Human Capital --- Aggregate Labor Productivity --- Business Fluctuations --- Cycles --- Nonwage Labor Costs and Benefits --- Private Pensions --- Labor Force and Employment, Size, and Structure --- Unemployment: Models, Duration, Incidence, and Job Search --- Demand and Supply of Labor: General --- Labor Turnover --- Vacancies --- Layoffs --- Labour --- income economics --- Labor force --- Labor markets --- Unemployment rate --- Labor flows --- Labor market --- United States --- Income economics

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We explore the long-term impact of economic booms on labor market outcomes using a novel approach based on revisions to professional forecasts over the past 30 years for 34 advanced economies. We find that when employment rises unexpectedly, forecasters typically raise their long-term forecasts of employment by more than one-for-one and also expect a strong rise in labor force participation, suggesting more persistent effects than is traditionally assumed. Economic booms associated with changes in aggregate demand, when inflation is rising and unemployment falling unexpectedly, also come with persistent long-term effects on expected employment and labor force participation, suggesting positive hysteresis. Our forecast evaluation tests indicate that forecasters are, on average, unbiased in their assessment of these positive, persistent effects.

Monetary policy. --- Monetary management --- Economic policy --- Currency boards --- Money supply --- Labor --- Business Fluctuations --- Cycles --- Studies of Particular Policy Episodes --- General Outlook and Conditions --- Demand and Supply of Labor: General --- Employment --- Unemployment --- Wages --- Intergenerational Income Distribution --- Aggregate Human Capital --- Aggregate Labor Productivity --- Unemployment: Models, Duration, Incidence, and Job Search --- Labor Force and Employment, Size, and Structure --- Labor Standards: Labor Force Composition --- Labour --- income economics --- Labor markets --- Unemployment rate --- Labor force --- Labor force participation --- Labor market --- Economic theory --- United States --- Income economics

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Wage rises have remained stubbornly low in advanced Europe in recent years, but, at the same time, newer EU members are experiencing rapid wage acceleration. This paper investigates the drivers of this wage divergence. Econometric analysis using error correction models suggests that wage growth responds more quickly to changes in unemployment in the newer EU members than in advanced Europe, where wages are more closely related to inflation and inflation expectations in the short run, implying greater inertia in nominal wage rises in advanced Europe. In the years after the global crisis, this inertia contributed to the build up of a real wage overhang relative to sharply slowing labor productivity, which subsequently dragged on nominal wage rises even as unemployment began to decline. Spillovers of subdued wage growth between euro area countries also weighed on wage rises in advanced Europe.

Wages --- Compensation --- Departmental salaries --- Earnings --- Pay --- Remuneration --- Salaries --- Wage-fund --- Wage rates --- Working class --- Income --- Labor costs --- Compensation management --- Cost and standard of living --- Prices --- Labor --- International Migration --- Wages, Compensation, and Labor Costs: General --- Unemployment: Models, Duration, Incidence, and Job Search --- Demand and Supply of Labor: General --- Wage Level and Structure --- Wage Differentials --- Labour --- income economics --- Real wages --- Labor markets --- Unemployment --- Unemployment rate --- Labor market --- Germany --- Income economics

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German wages have not increased very rapidly in the last decade despite strong employment growth and a 5 percentage point decline in the unemployment rate. Our analysis shows that a large part of the decline in unemployment was structural. Micro-founded Phillips curves fit the German data rather well and suggest that relatively low wage growth can be largely attributed to low inflation expectations and low productivity growth. There is no evidence – from either aggregate or micro-level administrative data – that large immigration flows since 2012 have had dampening effects on aggregate wage growth, as complementarity effects offset composition and competition effects.

Germany --- Labor --- Emigration and Immigration --- 'Panel Data Models --- Spatio-temporal Models' --- Price Level --- Inflation --- Deflation --- Wages, Compensation, and Labor Costs: General --- Mobility, Unemployment, and Vacancies: General --- International Migration --- Unemployment: Models, Duration, Incidence, and Job Search --- Demand and Supply of Labor: General --- Wage Level and Structure --- Wage Differentials --- Labour --- income economics --- Migration, immigration & emigration --- Wages --- Migration --- Labor markets --- Unemployment --- Unemployment rate --- Population and demographics --- Emigration and immigration --- Labor market --- Income economics --- Panel Data Models --- Spatio-temporal Models