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

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Listed:
  • 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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    Cited by:

    1. 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).
    2. Burton, Anne M. & Wasser, David N., 2025. "Revisiting the unintended consequences of Ban the Box," Journal of Public Economics, Elsevier, vol. 250(C).
    3. 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, IZA Network @ LISER.
    4. 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, IZA Network @ LISER.
    5. Kathrin Ellieroth, 2019. "Spousal Insurance, Precautionary Labor Supply, and the Business Cycle - A Quantitative Analysis," 2019 Meeting Papers 1134, Society for Economic Dynamics.
    6. 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).
    7. Robert Bernhardt & Phanindra V. Wunnava, 2023. "Does asking about citizenship increase labor survey non-response?," Journal of Population Economics, Springer;European Society for Population Economics, vol. 36(4), pages 2457-2481, October.
    8. 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.
    9. 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.
    10. 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.
    11. Abdullah Almaatouq, 2016. "Complex Systems and a Computational Social Science Perspective on the Labor Market," Papers 1606.08562, arXiv.org.
    12. Ibragimov, Rustam & Kim, Jihyun & Skrobotov, Anton, 2024. "New Robust Inference For Predictive Regressions," Econometric Theory, Cambridge University Press, vol. 40(6), pages 1364-1390, December.
    13. 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.
    14. Borgschulte, Mark & Cho, Heepyung & Lubotsky, Darren, 2022. "Partisanship and survey refusal," Journal of Economic Behavior & Organization, Elsevier, vol. 200(C), pages 332-357.
    15. 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).
    16. Ward, Jason M. & Anne Edwards, Kathryn, 2021. "CPS Nonresponse During the COVID-19 Pandemic: Explanations, Extent, and Effects," Labour Economics, Elsevier, vol. 72(C).
    17. Mr. Ippei Shibata, 2019. "Labor Market Dynamics: A Hidden Markov Approach," IMF Working Papers 2019/282, International Monetary Fund.
    18. Robert Bernhardt & David Munro & Erin L. Wolcott, 2024. "How does the dramatic rise of nonresponse in the Current Population Survey impact labor market indicators?," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 39(3), pages 498-512, April.
    19. Walter Distaso & Rustam Ibragimov & Alexander Semenov & Anton Skrobotov, 2022. "COVID-19: Tail risk and predictive regressions," PLOS ONE, Public Library of Science, vol. 17(12), pages 1-13, December.
    20. 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).
    21. 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.
    22. 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.
    23. 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).
    24. 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, IZA Network @ LISER.
    25. 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.

    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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