A Reason to Question the Official Unemployment Rate

http://economistsview.typepad.com/economistsview/2014/08/a-reason-to-question-the-official-unemployment-rate.html

August 26, 2014

David Leonhardt:

A New Reason to Question the Official Unemployment Rate: ...A new academic paper suggests that the unemployment rate appears to have become less accurate over the last two decades, in part because of this rise in nonresponse. In particular, there seems to have been an increase in the number of people who once would have qualified as officially unemployed and today are considered out of the labor force, neither working nor looking for work.

The trend obviously matters for its own sake: It suggests that the official unemployment rate – 6.2 percent in July – understates the extent of economic pain in the country today. ... The new paper is a reminder that the unemployment rate deserves less attention than it often receives.

Yet the research also relates to a larger phenomenon. The declining response rate to surveys of almost all kinds is among the biggest problems in the social sciences. ...

Why are people less willing to respond? The rise of caller ID and the decline of landlines play a role. But they’re not the only reasons. Americans’ trust in institutions – including government, the media, churches, banks, labor unions and schools – has fallen in recent decades. People seem more dubious of a survey’s purpose and more worried about intrusions into their privacy than in the past.

“People are skeptical – Is this a real survey? What they are asking me?” Francis Horvath, of the Labor Department, says. ...

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