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May 3, 2014

Latest Posts from Economist's View

Latest Posts from Economist's View


'Number of Missing Workers Jumps to All-Time High'

Posted: 03 May 2014 02:28 AM PDT

The EPI's Heidi Shierholz:

Number of Missing Workers Jumps to All-Time High: ... The biggest drop in LFPR in April was among men under the age of 20. To my knowledge, data on unemployment insurance exhaustions by age don't exist, but it is unlikely that young workers are a big proportion of exhaustions. This means that the April drop in labor force participation is likely not being driven by the expiration of federal unemployment insurance benefits last December as some have suggested, but simply by the weak labor market.
There is currently an all-time-high of 6.2 million missing workers (potential workers who are neither working nor actively seeking work due to the weak labor market). Almost a quarter of them (1.4 million) are under age 25. The ... unemployment rate for young workers would be 18.4 percent instead of 12.8 percent if the missing young workers were in the labor force looking for work and thus counted as unemployed.
For a complete picture of the labor market prospects facing the new cohort of young adults graduating from high school and college this spring, see the Class of 2014 report released yesterday. It includes, for example, a detailed discussion of the finding that there is little evidence that today's missing young workers are "sheltering in school".

Links for 5-03-14

Posted: 03 May 2014 12:03 AM PDT

'Varian: Big Data: New Tricks for Econometrics'

Posted: 02 May 2014 10:05 AM PDT

From the Journal of Economic Perspectives' Symposium on Big Data:

"Big Data: New Tricks for Econometrics,"  by Hal R. Varian: Computers are now involved in many economic transactions and can capture data associated with these transactions, which can then be manipulated and analyzed. Conventional statistical and econometric techniques such as regression often work well, but there are issues unique to big datasets that may require different tools. First, the sheer size of the data involved may require more powerful data manipulation tools. Second, we may have more potential predictors than appropriate for estimation, so we need to do some kind of variable selection. Third, large datasets may allow for more flexible relationships than simple linear models. Machine learning techniques such as decision trees, support vector machines, neural nets, deep learning, and so on may allow for more effective ways to model complex relationships. In this essay, I will describe a few of these tools for manipulating and analyzing big data. I believe that these methods have a lot to offer and should be more widely known and used by economists. Full-Text Access | Supplementary Materials

'Economy Adds 288,000 Jobs in April, Sharp Drop in Labor Force Leads to Plunge in Unemployment'

Posted: 02 May 2014 09:20 AM PDT

Dean Baker on the Jobs Report:

Economy Adds 288,000 Jobs in April, Sharp Drop in Labor Force Leads to Plunge in Unemployment: The economy added 288,000 jobs in April. With upward revisions to the prior two months' data, this brings the three month average to 234,000. This is highest three month total since the economy added 829,000 jobs in the first three months of 2012. The household survey showed unemployment rate falling from 6.7 percent in March to 6.3 percent in April, but the drop was entirely the result of 806,000 people leaving the labor force. Employment, as measured in the household survey, actually fell by 73,000. The employment-to-population ratio (EPOP) remained unchanged at 58.9 percent. ...
On the whole, this is a very positive report. While the April job growth was likely inflated as a result of bad weather in prior months, the three month average is still near the peaks for the recovery.

Update: Jared Bernstein:

the decline in unemployment is entirely due not to job creation, but to labor force decline (employment actually fell slightly in the household survey).  This important and closely watched indicator—the labor force participation rate—also fell 0.4 tenths, reversing recent gains and returning the lfpr to its low where it stood at the end of last year, commensurate with levels we haven't seen since the late 1970s.  Though part of the recent decline in the participation rate reflects our aging demographics, more than half in my judgment is due to weak demand.

The BLS noted that the large decline in the labor force—about -800,000—was likely due to fewer entrants as opposed to more leavers.  And this is a volatile number, as I stress below.  But neither can it be dismissed out of hand: it has been essentially stuck at historically low levels for a while now.

On the other hand, the payroll report shows pretty decent labor demand/job creation.  As noted, the 288,000 jobs beat expectations, and gains for the prior two months were revised up by 36,000.  Job gains occurred across most industries, with 67% of private industries expanding employment, the largest share in over two years (government employment was also up 15,000, almost all due to local government; federal employment was down slightly).

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