Do initial claims overstate layoffs?

Hobijn, Bart; Şahin, Ayşegül

Journal Article

Do initial claims overstate layoffs?

Abstract: Initial claims for unemployment insurance averaged a stubbornly high 468,000 in the year ending December 2010, but have recently come down quickly. Many analysts interpret this as a sign that layoffs were too high to support a strong labor market recovery during most of 2010. However, claims data may have exaggerated layoffs in 2010 because the fraction of unemployed workers applying for benefits was higher than before the recession. If the proportion of eligible workers who applied were held constant, 2010 claims would have averaged roughly 20% less than the actual reading.

Keywords: Unemployment insurance; Labor market; Unemployment;