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The Evolution of Rotation Group Bias: Will the Real Unemployment Rate Please Stand Up?

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  • Alan B. Krueger

    (Princeton University)

  • Alexandre Mas

    (Princeton University)

  • Xiaotong Niu

    (Congressional Budget Office)

Abstract

We document that rotation group bias—the tendency for the unemployment rate to vary systematically by month in sample—in the Current Population Survey (CPS) has worsened over time. Estimated unemployment rates for earlier rotation groups have grown sharply relative to later rotation groups; both should be nationally representative samples. This bias increased discretely after the 1994 CPS redesign, and rising nonresponse rates are likely a significant contributor. Survey nonresponse increased after the redesign, mirroring the evolution of rotation group bias. Consistent with this explanation, rotation group bias for households that responded in all eight interviews remained stable over time.

Suggested Citation

  • Alan B. Krueger & Alexandre Mas & Xiaotong Niu, 2017. "The Evolution of Rotation Group Bias: Will the Real Unemployment Rate Please Stand Up?," The Review of Economics and Statistics, MIT Press, vol. 99(2), pages 258-264, May.
  • Handle: RePEc:tpr:restat:v:99:y:2017:i:2:p:258-264
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    References listed on IDEAS

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    1. Robert G. Valletta, 1998. "Changes in the structure and duration of U.S. unemployment, 1967-1998," Economic Review, Federal Reserve Bank of San Francisco, pages 29-40.
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    Cited by:

    1. Fernando Rios-Avila & Gustavo Canavire-Bacarreza, 2020. "The Effect of Immigration on Labor Market Transitions of Native-Born Unemployed in the United States," Journal of Labor Research, Springer, vol. 41(3), pages 295-331, September.
    2. Rustam Ibragimov & Jihyun Kim & Anton Skrobotov, 2020. "New robust inference for predictive regressions," Papers 2006.01191, arXiv.org, revised Mar 2023.
    3. Ward, Jason M. & Anne Edwards, Kathryn, 2021. "CPS Nonresponse During the COVID-19 Pandemic: Explanations, Extent, and Effects," Labour Economics, Elsevier, vol. 72(C).
    4. Chodorow-Reich, Gabriel & Coglianese, John, 2021. "Projecting unemployment durations: A factor-flows simulation approach with application to the COVID-19 recession," Journal of Public Economics, Elsevier, vol. 197(C).
    5. Hie Joo Ahn & James Hamilton, 2022. "Measuring Labor-Force Participation and the Incidence and Duration of Unemployment," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 44, pages 1-32, April.
    6. Borgschulte, Mark & Cho, Heepyung & Lubotsky, Darren, 2022. "Partisanship and survey refusal," Journal of Economic Behavior & Organization, Elsevier, vol. 200(C), pages 332-357.
    7. Bernhardt, Robert & Wunnava, Phanindra V., 2020. "The CPS Citizenship Question and Survey Refusals: Causal and Semi-Causal Evidence Featuring a Two-Stage Regression Discontinuity Design," IZA Discussion Papers 13350, Institute of Labor Economics (IZA).
    8. Jenkins, Stephen P., 2020. "Was the mid-2000s drop in the British job change rate genuine or a survey design effect?," Economics Letters, Elsevier, vol. 194(C).
    9. Jessica Gallant & Kory Kroft & Fabian Lange & Matthew J. Notowidigdo, 2020. "Temporary Unemployment and Labor Market Dynamics during the COVID-19 Recession," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 51(3 (Fall)), pages 167-226.
    10. Mr. Ippei Shibata, 2019. "Labor Market Dynamics: A Hidden Markov Approach," IMF Working Papers 2019/282, International Monetary Fund.
    11. Hie Joo Ahn & James Hamilton, 2022. "Measuring Labor-Force Participation and the Incidence and Duration of Unemployment," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 44, pages 1-32, April.
    12. Bernhardt, Robert & Munro, David & Wolcott, Erin, 2021. "How Does the Dramatic Rise of CPS Non-Response Impact Labor Market Indicators?," GLO Discussion Paper Series 781, Global Labor Organization (GLO).
    13. Barry T. Hirsch & Muhammad M. Husain & John V. Winters, 2017. "The Puzzling Pattern of Multiple Job Holding across U.S. Labor Markets," Southern Economic Journal, John Wiley & Sons, vol. 84(1), pages 26-51, July.
    14. Ori Heffetz & Daniel B. Reeves, 2016. "Difficulty to Reach Respondents and Nonresponse Bias: Evidence from Large Government Surveys," NBER Working Papers 22333, National Bureau of Economic Research, Inc.
    15. Bach, Ruben L. & Eckman, Stephanie, 2020. "Rotation group bias in reporting of household purchases in the U.S. Consumer Expenditure Survey," Economics Letters, Elsevier, vol. 187(C).
    16. Kathrin Ellieroth, 2019. "Spousal Insurance, Precautionary Labor Supply, and the Business Cycle - A Quantitative Analysis," 2019 Meeting Papers 1134, Society for Economic Dynamics.
    17. Abdullah Almaatouq, 2016. "Complex Systems and a Computational Social Science Perspective on the Labor Market," Papers 1606.08562, arXiv.org.
    18. Walter Distaso & Rustam Ibragimov & Alexander Semenov & Anton Skrobotov, 2020. "COVID-19: Tail Risk and Predictive Regressions," Papers 2009.02486, arXiv.org, revised Oct 2021.
    19. Jonathan Eggleston & Mark Klee & Kristin McCue & Kristin Sandusky & Jim Spletzer, 2020. "The Impact of 2010 Decennial Census Hiring on the Unemployment Rate," Working Papers 20-19, Center for Economic Studies, U.S. Census Bureau.
    20. Li, Teng & Barwick, Panle Jia & Deng, Yongheng & Huang, Xinfei & Li, Shanjun, 2023. "The COVID-19 pandemic and unemployment: Evidence from mobile phone data from China," Journal of Urban Economics, Elsevier, vol. 135(C).
    21. Hirsch, Barry & Husain, Muhammad M. & Winters, John V., 2016. "The Puzzling Fixity of Multiple Job Holding across Regions and Labor Markets," IZA Discussion Papers 9631, Institute of Labor Economics (IZA).
    22. Ori Heffetz & Daniel Reeves, 2020. "Measuring Unemployment in Crisis: Effects of COVID-19 on Potential Biases in the CPS," NBER Working Papers 28310, National Bureau of Economic Research, Inc.
    23. Bollinger, Christopher R. & Hirsch, Barry & Hokayem, Charles M. & Ziliak, James P., 2018. "Trouble in the Tails? What We Know about Earnings Nonresponse Thirty Years after Lillard, Smith, and Welch," IZA Discussion Papers 11710, Institute of Labor Economics (IZA).

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    More about this item

    JEL classification:

    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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