Misclassification Errors and the Underestimation of the U.S. Unemployment Rate

Shuaizhang Feng and Yingyao Hu

Economics Working Paper Archive from The Johns Hopkins University,Department of Economics

Abstract: Using recent results in the measurement error literature, we show that the official U.S. unemployment rate substantially underestimates the true level of unemployment, due to misclassification errors in the labor force status in the Current Population Survey. During the period from January 1996 to August 2011, the corrected monthly unemployment rates are between 1 and 4.4 percentage points (2.1 percentage points on average) higher than the official rates, and are more sensitive to changes in business cycles. The labor force participation rates, however, are not affected by this correction.

Date: 2012-05
New Economics Papers: this item is included in nep-lab and nep-lma
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Related works:
Journal Article: Misclassification Errors and the Underestimation of the US Unemployment Rate (2013)
Working Paper: Misclassification Errors and the Underestimation of U.S. Unemployment Rates (2010)
Working Paper: Misclassification errors and the underestimation of U.S. unemployment rates (2010)
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