Reconciling Unemployment Claims with Job Losses in the First Months of the COVID-19 Crisis

61 Pages Posted: 23 Jul 2020

See all articles by Tomaz Cajner

Tomaz Cajner

Board of Governors of the Federal Reserve System

Andrew Figura

Board of Governors of the Federal Reserve System - Macroeconomic Analysis Section

Brendan Price

Board of Governors of the Federal Reserve System

David Ratner

Board of Governors of the Federal Reserve System

Alison Weingarden

Board of Governors of the Federal Reserve System

Date Written: July 1, 2020

Abstract

In the spring of 2020, many observers relied heavily on weekly initial claims for unemployment insurance benefits (UI) to estimate contemporaneous reductions in US employment induced by the COVID-19 pandemic. Though UI claims provided a timely, high-frequency window into mounting layoffs, the cumulative volume of initial claims filed through the May reference week substantially exceeded realized reductions in payroll employment and likely contributed to the historically large discrepancy between consensus expectations of further April-to-May job losses and the strong job gains reflected in the May employment report. Analyzing the relationship between UI claims and underlying employment, we argue that insured unemployment--an alternative high-frequency indicator that responds to gross job gains as well as gross job losses--offers important advantages as a barometer of labor market conditions. Adjusting for reporting artifacts and for time lags between employment flows and associated claims, we show that insured unemployment comoved strongly with payroll employment throughout the first months of the pandemic, as it did during the Great Recession.

JEL Classification: E24, J65

Suggested Citation

Cajner, Tomaz and Figura, Andrew and Price, Brendan and Ratner, David and Weingarden, Alison, Reconciling Unemployment Claims with Job Losses in the First Months of the COVID-19 Crisis (July 1, 2020). FEDS Working Paper No. 2020-055, Available at SSRN: https://ssrn.com/abstract=3655846 or http://dx.doi.org/10.17016/FEDS.2020.055

Tomaz Cajner (Contact Author)

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Andrew Figura

Board of Governors of the Federal Reserve System - Macroeconomic Analysis Section ( email )

20th & C. St., N.W.
Mailstop 80
Washington, DC 20551
United States
(202) 452-2583 (Phone)
(202) 452-3819 (Fax)

Brendan Price

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

David Ratner

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Alison Weingarden

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
58
Abstract Views
217
rank
399,032
PlumX Metrics