MEASURING THE SEVERITY OF UNEMPLOYMENT

A social-welfare (illfare) function framework is applied to compare tw o demographic groups as to the severity of their unemployment experien ce. This is based on the assumption that for each individual the disut ility of unemployment is an increasing and convex function of spell le ngth. The very concept of spell length and its distribution, however, is not unambiguous. In contrast to previous literature which focuses e xclusively on the ''interrupted spell length in a stock of unemployed, '' we stress the usefulness of the concept of ''complete spell length in a cohort of unemployed.'' We establish an equivalence relationship between second-degree dominance in the cohort and first-degree dominan ce in the stock. For specific illfare functions the disutility U(x) wh en applied to the cohort and the disutility U'(x) when applied to the stock will produce the same value of aggregate welfare (illfare).