Fed economists claim decrease in unemployment due to Americans exhausting hope

http://www.examiner.com/political-buzz-in-national/fed-economists-claim-decrease-unemployment-due-to-americans-exhausting-hope

June 1st, 2011 11:59 am ET
Glenn Wright

Two Chicago Federal Reserve economists have issued a letter, claiming that part of the decline in unemployment between October 2009 to January 2011, came as a result of job-seekers exhausting their unemployment benefits, and afterward giving up hope of finding a job.

When job-seekers go a short period of time without looking for work, they are reclassified as "out of the labor force", and are no longer counted as being unemployed. This will artificially reduce the rate of unemployment, without reflecting the number of unemployed people who might want work if they could find it.


The Chicago Fed economists say "about 10% to 25% of the decline in the actual unemployment rate" between October 2009 and January 2011 is attributable to what they call "exhausters", people who exhausted their unemployment benefits and dropped out of the labor force altogether.

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