Measuring Unemployment in Crisis: Effects of Covid-19 on Potential Biases in the CPS

30 Pages Posted: 4 Jan 2021 Last revised: 8 Nov 2021

See all articles by Ori Heffetz

Ori Heffetz

Cornell University - S.C. Johnson Graduate School of Management; The Hebrew University of Jerusalem - Department of Economics and Center for Rationality; National Bureau of Economic Research (NBER)

Daniel Reeves

Capital One Bank

Multiple version iconThere are 2 versions of this paper

Date Written: December 2020

Abstract

From February to April 2020, as COVID-19 hit the U.S. economy, the official unemployment rate (UR) climbed from 3.5 percent—the lowest in more than 50 years—to 14.7—the highest since current measurement began in January 1948. This unprecedented, speedy quadrupling of UR coincided with major disruptions in survey-data-collection procedures and a dramatic, differential drop in response rates. To what extent did measurement issues contribute to this quadrupling? We revisit two recently studied potential biases in the Current Population Survey: rotation group bias (Krueger, Mas and Niu, 2017) and difficulty-of-reaching bias (Heffetz and Reeves, 2019). We extend the original analyses to the years prior to the crisis and focus on the six months of peak UR, from April to September 2020. Our ballpark estimates suggest that the peak official UR figure could be biased by up to ∼1.5 percentage points in either direction.

Suggested Citation

Heffetz, Ori and Reeves, Daniel, Measuring Unemployment in Crisis: Effects of Covid-19 on Potential Biases in the CPS (December 2020). NBER Working Paper No. w28310, Available at SSRN: https://ssrn.com/abstract=3759848

Ori Heffetz (Contact Author)

Cornell University - S.C. Johnson Graduate School of Management ( email )

324 Sage Hall
Ithaca, NY 14853
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The Hebrew University of Jerusalem - Department of Economics and Center for Rationality

Mount Scopus
Jerusalem, Jerusalem 91905
Israel

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
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HOME PAGE: http://www.nber.org/~heffetz

Daniel Reeves

Capital One Bank ( email )

6890 Elm Street
McLean, VA 22101
United States

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