Working Paper: NBER ID: w28310
Authors: Ori Heffetz; Daniel Reeves
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.
Keywords: Unemployment; COVID-19; Survey Biases; Current Population Survey
JEL Codes: C18; C83; I18; J60
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| rotation group bias (C46) | official unemployment rate (UR) (J64) |
| difficulty-of-reaching bias (D91) | official unemployment rate (UR) (J64) |
| rotation group bias + difficulty-of-reaching bias (D91) | official unemployment rate (UR) (J64) |
| difficulty-of-reaching slope (COVID) (I14) | difficulty-of-reaching bias (D91) |
| rotation group bias (stable) (C46) | real increase in UR (R19) |
| difficulty-of-reaching bias (stable) (D91) | real increase in UR (R19) |