Length of Unemployment: Up or Down?

Posted by: Michael Mandel on May 25

Just read several interesting items on the length of unemployment. Paul Krugman wrote in the NYT on May 23 that “unemployment lasts much longer than it used to.” Writing in EconoPundit, Steve Antler argues, with a little chart, that “relative to 1983 recession-peak-unemployment lasts about two weeks less than it used to.” Brad DeLong responds, with yet more charts, arguing that Krugman is right, and that “Steve Antler writes with forked tongue.”

Here’s Antler’s chart. Decide for yourself.

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Reader Comments

spencer

May 25, 2005 11:28 AM

Why don't you include Delong's chart on the cyclically adjusted data?

It would seem to be a fair and balanced way to discuss the issue.

spencer

May 25, 2005 12:18 PM

I just checked the claim that since 1983 the trend has been down. Yes, the peaks have been lower, but the bottoms have been higher. When you run a regression to take into the impact of both, you find that the slope since 1983 has been the equation y=0.003x + 15.426.
So when you take all the data points into account, not just the peaks, the statement that the trend has been down since 1983 is incorrect.

Jack Krupansky

May 25, 2005 12:27 PM

Maybe some day you could explain why economics has come to be called "the dismal science".

Seriously, the big issue facing us is not the classic cyclical production worker layoff/rehire cycle time which depends of working off excess inventory, but the layoff/retrain/rehire cycle time (and significant cost) facing the economy as whole industries go through traumatic non-inventory restructuring. How would you like to be a senior airline captain at United? Or a senior software developer whose job is (or might be) being offshored? The length of unemployment is no longer tied to the average time it takes an average company to work off excess inventory.

Now, the "average" may not be higher than than a few times in the past, but what about the *distribution* of unemployment times? And what of workers who lose a "good" job and have no choice but to take a 50% pay cut at a much lower skilled job while they blindly navigate an uncertain "retraining" process... does it really make much sense to use a binary decision process and say that they are now "fully" employed in these statistics when *everybody* knows that they are grossly under-employed? Dismal indeed.

Geez, here I am effectively defending Paul Krugman... shame on me.

-- Jack Krupansky

Patrick R. Sullivan

May 26, 2005 10:22 AM

Sorry, spencer, but the TREND of both the tops and the bottoms is down since the recession of the early 1980s. Which is the opposite of the trend from 1968 to 1980.

Further, Krugman's is clearly wrong that workers lose their jobs more often after 1980 than prior. The BLS only has that date back to 1967, but the trends are clearly opposite.

I've graphed both at my blog.

James

May 27, 2005 12:32 AM

Brad DeLong is a fraud. I made several polite and respectful posts on his site with arguments proving he is wrong, and he deleted and altered several of them. Then me and one other poster post that it is unprofessional to do this, and he deletes those posts and bans me from the site. I guess he is just some egomaniac who only wants people to tell him how brilliant he is. So much for the free speech movement at Berkeley.

Brad DeLong

May 28, 2005 08:23 PM

Ummm...

There are four ways you can look at changes in unemployment duration.

You can look at unemployment duration at business cycle troughs. You can look at unemployment duration at business cycle peaks. You can cyclically detrend unemployment duration. You can look at average unemployment duration during business cycles.

All four measures show unemployment duration higher in the 2000s than in the 1950s, 1960s, and 1970s. All measures but the first show unemployment duration higher in the 2000s than in the 1980s and the 1990s.

Whatever's going on in Antler's choice of the first and only the first way, it's not economics.

Aaron

May 30, 2005 10:51 PM

Higher unemployment duration could be caused by several things other than job insecuirty:

aging population
hollowing out of industry (leads to outliers)
better and longer unemployment benefits

I can see the 56 year old lathe machinist who is now looking for a job will take a longer time than in 1965 or 1975. A really long time.

As an aisde, I don't think the pilot should be too worried...the market for pilots is now global. Flying Dragonair inside China the pilots are all foreign.

Michael Mandel

June 5, 2005 10:15 PM

Hi Brad,

I'm leaning towards the conclusion that unemployment duration has gone up. My guess, though, is that unemployment search is a normal good--because higher-income workers have more resources, they can therefore afford to do a better (longer) search.

williams

February 2, 2009 01:12 AM

I'm leaning towards the conclusion that unemployment duration has gone up. My guess, though, is that unemployment search is a normal good--because higher-income workers have more resources, they can therefore afford to do a better (longer) search

,,,,,,,,,DUDE U KIDDING
OF COURS RICH PEOPLE DU BETTER

Thank you for your interest. This blog is no longer active.

 

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Michael Mandel, BW's award-winning chief economist, provides his unique perspective on the hot economic issues of the day. From globalization to the future of work to the ups and downs of the financial markets, Mandel-named 2006 economic journalist of the year by the World Leadership Forum-offers cutting edge analysis and commentary.

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