I just noticed that problem set 3 did not post to the course web page on Friday. It is now posted. Solutions will be posted during week 10.
Archive
I have to move my office hours this week to Thu (11/20) 1:00-3:00p. As always I will be in 103 Marshall College. My office hours will return to their regular time next week.
I posted a revised version of my job market, “Understanding Unemployment Dynamics: The Role of Time Aggregation.” Here is the abstract:
This paper uses weekly data from the Survey of Income and Program Participation (SIPP) to estimate the role of time aggregation in measuring gross labor force flows and unemployment dynamics. Time aggregation is substantial: gross flows estimated from monthly data understate the true number of transitions by 15–24 percent. Time aggregation in both separations to unemployment and accessions from unemployment comoves positively with the business cycle. The effect from time aggregation on separations is roughly offset by its effect on accessions, however, creating no meaningful cyclical bias in measured gross flows or hazard rates. Contrary to claims by Hall (2006) and Shimer (2007), separation hazard rates calculated from the SIPP and the Current Population Survey are strongly countercyclical and remain so after adjusting for time aggregation. In addition, the separation hazard rate contributes fully one-half of the cyclical variance of the steady-state unemployment rate after adjusting for time aggregation.
Revised solutions to problem set 1b are now posted. If you downloaded the solutions prior to 7p today, make sure you download the revised version (econ101-2008f-ps1b-soln1.pdf).
Problem set 1c will be posted tomorrow.
The syllabus for Economics 101 has been posted on the course web page. You may download it directly here.
knzn wonders how many people have lost their jobs in 2008?
According to Barack Obama, 600 thousand Americans have lost their jobs since January. Actually, he’s wrong: something like 20 million Americans have lost their jobs since January. It’s just that most of them found new jobs. Probably the new jobs generally weren’t as good as the ones they lost. And almost certainly, more than 600 thousand of them were unable to find new jobs, because many of the new jobs created were filled by new entrants to the labor force or by people who were already unemployed when the year began.
Like almost everyone else I’ve ever heard, Senator Obama is making the mistake of using a net job loss figure with language that, if taken in its plain sense, clearly implies he is talking about gross job loss. And it seems to me that gross job loss is the appropriate concept: losing your job is a pretty serious bummer, even if you are able to find a new one after a few months.
knzn is right to highlight the distinction between gross and net employment outflows. Obama probably was talking about gross job losses. But the reason presidents talk about “the economy” “creating” so many jobs — never mind that an economy can’t create anything — is because that’s the proper way to interpret the statistic.
It is disingenuous to claim that 20 million workers lost jobs in 2008 without also talking about the 19.4 million persons who found new jobs. It would be equally disingenuous for Bush to claim he “created” 19.4 million jobs in 2008. That brings the discussion back to a net flow of 600 thousand.
Composition effects are large and important, as are the welfare losses from unemployment, but it was the 20 million number that struck me — as too small.
I discussed earlier that about 5 percent of the population (10 million persons) moves into and out of employment every month. Assuming outflows account for roughly half of that, we get 5 million persons a month. Over 8 months that comes to 40 million persons, twice knzn’s estimate.
To be fair, knzn’s figure is a rough estimate based on last year’s data and we all know the risk of projecting current trends into the future — just ask LTCM, Bear Stearns, Lehman Brothers, etc. And I suspect that I’m taking knzn’s forecast more seriously than he does but since I’ve already hauled out the sledgehammer, let’s find that fly.
Continue reading ‘Gross flows on the campaign trail’
I am teaching Economics 101 this quarter. The course meets Tuesday and Thursday from 9:30-10:50 in the Patrick J. Ledden Auditorium. The room has been changed to 115 Center Hall.
My office hours are Wednesdays 9:00-11:00a in 117 Economics.
More information about the course, including links to the syllabus and assignments, can be found on the course web page.
Who do you think will win the 2008 Presidential election? Prediction markets, such as those at Intrade, have contracts on about anything you can imagine — e.g., Will the U.S. economy go into recession during 2008? Will United Financial to fail this year? Will the Higgs boson be observed before 2009? — including who will win in November. I am tracking 2 contracts, the probability that Barack Obama wins and the probability that John McCain wins.
These 2 series, along with their difference, can be found on this page.