Research Highlights Education enhances re-employment outcomes of unemployed workers. Second, even if one accepts that adjusting the unemployment rate for rising educational attainment is conceptually reasonable, adding age and education adjustments together is likely to lead to an overstatement of their net effects, through “double counting” of age and cohort influences on educational attainment. Our results suggest that the aging of the labor force and rising educational attainment can account for a significant portion of the decline in the unemployment rate over the past two and a half decades. For example, teenagers constitute a disproportionate share of individuals with low educational attainment; therefore, an adjustment that accounts for the reduction in the labor force share of individuals lacking a high school degree will reflect in part the aging of the labor force that has reduced the share of teenagers. Second, even if one accepts that adjusting the unemployment rate for rising educational attainment is conceptually reasonable, adding age and education adjustments together is likely to lead to an overstatement of their net effects, through “double counting” of age and cohort influences on educational attainment. However, they have exceeded 10% several times between 1998 and 2010 for those without an upper secondary education. Although rising age and education made important contributions, they explain only about one-half or less of the decline in the unemployment rate over the past few decades. Summers, Lawrence. The national unemployment rate fell slowly during the first half of 2005, reaching 5.0% in June. This Economic Letter focuses on two demographic factors that help explain the reduction in the unemployment rate over the past few decades. As public funds are directed to health and social welfare, long-term public spending on education is at risk despite short-term stimulus packages in some countries. However, the impact of adjustments for changing shares by sex has become quite small over the past few decades, due to convergence in unemployment rates between men and women and relative stability in women’s labor force shares since the 1980s (see, for example, Shimer 1999). Please send editorial comments and requests for reprint permission to Attn: Research publications, MS 1140 Our results suggest that both factors made a significant contribution to the downward trend in the unemployment rate over the past few decades, although their influence was not large enough to fully account for the very low rates achieved near the most recent business cycle peak (years 1999-2000). Empirical tests conducted as part of this research indicated that, for the period we analyze, this assumption of independence between unemployment rates and labor-force shares is strongly violated when groups are defined by age or education alone, but for most years it is met quite closely when we divide the labor force by joint age and education groupings. The impact of changing age composition on the unemployment rate can be assessed through calculation of an “age-adjusted unemployment rate.” This series is formed by multiplying each age group’s unemployment rate over time by its labor force share in a fixed base year. Comparing the official and adjusted series across comparable points in the business cycle, we find that changing labor force shares of groups defined jointly by age and education led to a reduction in the unemployment rate of 0.9 to 1 percentage point between the business cycle peaks and troughs of the late 1970s/early 1980s and the early 2000s; this equals about one-half to one-fourth of the overall decline in the unemployment rate (1.8 to 3.7 percentage points). In this study, we analyze the role of education in providing protection from unemployment. In particular, spending on education may be compromised in the coming years. The Impact of Education on Unemployment Incidence and Re-employment Success: Evidence from the U.S. Labour Market* This study investigates the causal effects of education on individuals’ transitions between employment and unemployment, with particular focus on the extent to which education improves re-employment outcomes among unemployed workers. The most commonly applied demographic adjustment to the observed unemployment rate is based on changing labor force shares by age group. 1986. Federal Reserve Bank of San Francisco 11-61. The discussion borders much on graduate unemployment, this we take it to be tertiary education from the polytechnics through first to second degrees and others within the brackets.