Wisconsin’s unemployment rate has dropped to 2.8 percentage points in April. The national rate is 3.9 percentage points. Proof of Walkernomics success? Well, since on average Wisconsin’s unemployment rate is typically 0.9 percentage points below, the answer is “no”. Consider the Wisconsin and US unemployment rates.
I estimate the mean differential for 1986-2010 (the Great Moderation period pre-Walker) using OLS, and show the actual, the mean differential and the 90% prediction interval, below.
Figure 2: Unemployment rate differential US minus WI, in percentage point (black), estimated mean (red), and 90% prediction interval. Walker administrations shaded orange. Source: BLS, DWD, NBER, and author’s calculations.
Since I have not incorporated HAC standard errors, I am actually understating the width of the prediction interval.
To sum up: Wisconsin is doing just about as well as one would expect given historical pattern relating the national and Wisconsin unemployment rates. (And in any case, we shouldn’t be paying much attention to state-level unemployment rates because of the sampling error.)