Do initial claims overstate layoffs?

Bart Hobijn and Aysegul Sahin

FRBSF Economic Letter, 2011, issue feb7

Abstract: Initial claims for unemployment insurance averaged a stubbornly high 468,000 in the year ending December 2010, but have recently come down quickly. Many analysts interpret this as a sign that layoffs were too high to support a strong labor market recovery during most of 2010. However, claims data may have exaggerated layoffs in 2010 because the fraction of unemployed workers applying for benefits was higher than before the recession. If the proportion of eligible workers who applied were held constant, 2010 claims would have averaged roughly 20% less than the actual reading.

Keywords: Unemployment insurance; Labor market; Unemployment (search for similar items in EconPapers)
Date: 2011
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