“Neither model could identify this effect as different from 0.”

Key phrase buried in the Appendix to the Badger Institute‘s study entitled: “Unemployment (Over)compensation: How the federal supplemental unemployment benefits impacted unemployment during the pandemic” (April 2022).

From the executive summary:

Our analysis found that the supplemental unemployment insurance (UI) benefit did appear to delay people returning to work, and we estimate that unemployment was 3% to 6% higher because of the federal supplement in the states that kept it in place until September 2021, which translates to an unemployment rate of 0.2 to 0.3 percentage points higher. If Wisconsin had opted out of the supplement in June, the total unemployment would have dropped faster than it did. By September, we estimate, there would have been about 28,000 fewer unemployed.

The authors of this report (h/t Erik Gunn) find this result by exploiting the differences in timing for ending the supplemental unemployment insurance benefit.

In general the econometrics are fairly well executed. The authors control for economic growth (although they don’t define the variable), time trend, labor force participation.

However, they don’t  control of public health measures. Moreover, from a statistical standpoint, the inclusion endogenous variables like labor force participation which arguably is also affected by early termination of enhanced unemployment insurance.

But, from my standpoint, the central issue is that it is problematic to make policy conclusions on the basis of a crucial parameter estimate that is not statistically significant at conventional levels (whether we should use a lower significance level for policy analysis is a legitimate topic of debate).

 

 

22 thoughts on ““Neither model could identify this effect as different from 0.”

  1. ltr

    Easier to read:

    https://www.badgerinstitute.org/BI-Files/BIReport_2022Unemployment_12page_finalforprint.pdf

    April, 2022

    Unemployment (Over)compensation
    By Ike Brannon, Loren Wagner & Sam Wolf

    Executive Summary

    Our analysis found that the supplemental unemployment insurance (UI) benefit did appear to delay people returning to work, and we estimate that unemployment was 3% to 6% higher because of the federal supplement in the states that kept it in place until September 2021, which translates to an unemployment rate of 0.2 to 0.3 percentage points higher.

    If Wisconsin had opted out of the supplement in June, the total unemployment would have dropped faster than it did. By September, we estimate, there would have been about 28,000 fewer unemployed.

    Reply
    1. ltr

      In general the econometrics are fairly well executed. The authors control for economic growth (although they don’t define the variable), time trend, labor force participation.

      However, they don’t control [for] public health measures….

      Menzie Chinn

      [ Failure to control for public health measures in the midst of an epidemic is, to me, immediately study discrediting. ]

      Reply
  2. joseph

    “By September, we estimate, there would have been about 28,000 fewer unemployed.”

    So far in the pandemic Wisconsin has had almost 300,000 documented cases and 15,000 deaths. I wonder how many of those 28,000 would be dead if they had been prematurely forced back to work in the middle of a pandemic.

    Reply
  3. joseph

    Ike Brannon, Loren Wagner & Sam Wolf

    When you write one thing in the Executive Summary and then bury the punchline on the last sentence of the Appendix you can be quite clear who is paying their salaries. Economists for hire, like lawyers, can argue any side of an issue if you pay them enough.

    Reply
    1. ltr

      What we are dealing with is expressly public health policy, which is what the study authors choose to pay no attention to. Notice the tragedy of Arizona:

      https://www.worldometers.info/coronavirus/

      June 22, 2022

      Coronavirus

      Wisconsin

      Cases ( 1,714,060)
      Deaths ( 14,746)

      Deaths per million ( 2,533)

      Arizona

      Cases ( 2,109,053)
      Deaths ( 30,452)

      Deaths per million ( 4,177)

      Reply
  4. Moses herzog

    Fun game. Download the link on the UI and download it in PDF form and type in “child care” and see how often it gets mentioned. Once. Do the authors think that if the UI/benefit was lower that that will hasten women going back to work for companies that offer zero child care?? One time the authors mention child care as if to say that if they lowered the compensation mothers’ tax rate would go down. So, maybe they should offer them a 25cents an hour and see if that lowers working mothers’ tax rate?? Which category jobs (income level) does Mike Nichols imagine, in that thing he calls a “brain”, are people not going back to?? Last time I checked they were in the shitty jobs category. If employers lowered exorbitant executive pay, payed a living wage to frontline workers, and offered child care maybe they’d be very Happy to go back to work. Mike Nichols’ answer is “Keep treating working families like shit, and they go back to work faster”. Sorry Mike, that’s the type answer a 4th grader could tell you, isn’t going to work.

    Mike Nichols answer for working class mothers: “Ignore your child/children now~~you’ll get a promotion and then your child will suffer no emotional/developmental damage!!!!’ Wow, Mike Nichols, man of the braindead fairytales, coming to a town square near you to kneel down and tell your children about Peter Pan and the elephant who flew with his ears. Why not?? Mr. Nichols is telling the same type fairytales to their mothers,

    Reply
  5. macroduck

    Off topic – Really Bad Real Estate –

    “An analysis by Bloomberg Economics shows that 19 OECD countries have combined price-to-rent and home price-to-income ratios” more extreme than ahead of the 2008 hiccough.

    https://www.bloomberg.com/news/features/2022-06-21/cooling-real-estate-markets-in-us-uk-risk-deeper-global-economic-slump?srnd=premium#xj4y7vzkg

    In a rising rate environment, price-to-income ratios might improve pretty soon. I wonder whether Bloomberg did a pig-to-rent ratio or a garlic-to-income ratio analysis for China. (Howdy, Ivan.)

    Reply
    1. pgl

      Could someone inform Bloomberg Economics that interest rates in 2008 were higher than they are today? After all one should expect Bloomberg Economics to get basic finance even if Princeton Steve does not.

      Reply
  6. macroduck

    Off topic – lumber market troubles, mostly for Russia –

    In Q1, the top 15 softwood exporting countries reported exports down by 3 million square meters. Russia accounted for about 2/3 of that drop, with a 46% decline in exports:

    https://www.timber-online.net/sawn_timber/2022/06/reduced-lumber-trade-flows-due-to-the-war-in-ukraine.html

    Russian sawmills are announcing curtailment or suspension of production:

    https://www.timber-online.net/sawn_timber/2022/06/russian-sawmills-are-curtailing-production.html

    The U.S. doesn’t rely on Russia much for lumber. CME random length futures are back down to prices last seen about 8 months ago, down 46% year-to-date. Inflation, I guess.

    Reply
  7. macroduck

    Oh, heck, as long as I’m at it…

    Some commeners have been praying for a recession ahead of the mid-term elections, and getting huffy with anyone who won’t kneel and pray with them. Bad moods? Recession! Inflation? Recession! Biden won the presidency? Recession!

    Well, the Atlanta Fed’s GDPNow estimate landed on zero this week, so you know what’s coming…howls of Recession! (Inventories are the main drag so far in the Q2 tally similar to Q1.)

    Thought I’d amble over to FRED and look at GDI and final sales of domestic product, to if there is broader evidence of a slowdown in domestic activity than just inventory-flattened GDP. Here’s the picture:

    https://fred.stlouisfed.org/graph/?g=QQC2

    Hard to imagine NBER will declare a recession in H1 of this year given that performance. Probably won’t keep distempered minds from making stuff up, but I can’t fix that.

    Reply
  8. Moses Herzog

    Arther Laffer was on FOX Business today. BTW was I the last person to find out FOX Business gave Kudlow his own show??

    When is “Princeton”Kopits going on Kudlow??

    Reply
    1. pgl

      I would ask if there is a link to this comic relief but I have too many podcasts that serve only to kill brain cells already.

      Reply
    2. pgl

      Damn it Kudlow does have his own clown show:

      https://www.foxbusiness.com/shows/kudlow

      I am providing this link only to warn people to make sure their computers avoid clicking on these absurd rants at all costs. Even if one can avoid having Kudlow”s utter stupidity rot one’s brain, his insane partisan rants might get viewers all angry and heading for the liquor cabinent.

      Reply
    3. pgl

      “When is “Princeton”Kopits going on Kudlow??”

      OK – i confess. I watched that 5 minute Kudlow rant where he claimed Biden was on some reckless spending spree driving up inflation. But wait – Stevie has been running around with his hair on fire that we have cut government spending by 7% of GDP. Well which is it? Of course the reality is that neither one of these economic know nothings has this right.

      Yes as Stevie says the deficit has fallen. That sort of happens when a strong economy leads to more collected tax revenues. But listen to Kudlow (if you have the stomach) telling his gullible Faux Business News that the deficit is out of control.

      It would be fun to watch Stevie and Larry try to reconcile their conflicting lies!

      Reply
    1. Barkley Rosser

      Moses,

      I guess we are supposed to all LOL at this, although this is a bit unclear given that a) you are constantly making serious false accusations about me, and b) you yourself failed to realize that something I said was sarcastic, my comment on Lukashenka fearing invasion from Ukraine, and blasted that here as some sign of me saying something stupid.

      For the record, I believe I have never said anything about Rupert Murdoch here, and I knew nothing at all about who he has been married to. So, no, I certainly did not promise Moses any money in connection with anything having to do with Murdoch or his marriage. If you all wish to guffaw over this, go right ahead, but, frankly, given his track record, he should just avoid trying to make “humorous” wisecracks about me.

      Reply
      1. Moses Herzog

        I promise you Professor Rosser, you are the only person on this ENTIRE blog who took that comment in a serious way, another indication of how self-obsessed you are and way oversized ego. Just take a break from your ego for 5 minutes. Ask yourself if there are indeed other people on the planet with thoughts and feelings ulterior to your own. You’ll probably find it liberating, if you get over the initial shock.

        Reply
      2. Moses Herzog

        BTW, nobody here took your words on Lukashenko as “sarcastic” but your words on ZELENSKY as “the poor thing” rang through as very sarcastic, and you’re so G*DAMNED DUMB you think people will buy that you were, what, being “reverse sarcastic” when you said that about ZELENSKY??? PLEASE PLEASE PLEASE PLEASE PLEASE PLEASE FOR THE LOVE OF GOD AND YOUR SAD SORRY STUDENTS RETIRE TOMORROW. PLEASE

        Reply
        1. Barkley Rosser

          Moses,

          You are the one who keeps dragging me into all sorts of things I am not commenting on, often with completely off the wall if not outright false claims. So your claims that I am somehow “self-obsessed are krap. I am just trying to defend myself against your repeated out of the blue attacks. You want to justify your lie that I “make s**t up”? Making mistakes from time to time is not the same as that.

          So, now I really do not know what to make of what you are claiming here. Supposedly everybody knows you were joking on this Murdoch bit and me, which I think is probably correct, although I am not sure our barely functional “Anonymous” got it. But now you are claiming that “nobody took your words on Lukashenko as ‘sarcastic.'” Really? I confess now that I have no idea if you are being serious or sarcastic with that claim.

          If you took them seriously then you are a total blazing idiot. They were obviously sarcastic, although I know you are looking for every little possible goof on my part to declare how I need to retire. As I previously pointed, gag, I hate having to repeat these explanations because you do not get them, at the same time I made that remark I commented on how “of course” Lukashenka was justified in being afraid of a Ukrainian invasion because Zelenskyy had written this essay about how Belarus did not exist. Of course, Zelenskyy has written nothing of the sort, and I was obviously mocking Putin who did write an essay I have commented on here numerous times last July when he denied the historical existence of Ukraine, his ultimate justification for his unjustifiable invasion.

          Given this remark about the nonexistent Zelenskyy essay, it should have been obvious to anybody who was not totally ignorant or totally stupid that I was being sarcastic and mocking Putin, while recognizing that indeed he had been lying about the Russian troops going home as they were clearly now going to remain in Belarus at least for awhile to suppolsedly protect it from this nonexistent threat of an invasion by Ukraine.

          So, Moses, ‘fess up. Are you actually being serious in claiming that you did not get it that I was being sarcastic with that comment? Or are you just joking and being sarcastic now? You seem quite certain others can figure these things out. And, of course, if you took it seriously, which is it? Are you ignorant or stupid or both?,

          BTW, for the record, “Lukashenka” is the transliteration that refelects how his name is actually pronounced and was previously used in the western media, but some ignoramous got to them that this was incorrect probably on gender grounds (oooh, female ending in some languages!!!) and now they all say “Lukashenko.” But if you meet the guy, pronounce it with the “a” on the end, not the “o.” You might get beaten ot shot or poisoned if you do not, just to remind you that in fact I am the expert around here on matters involving the former USSR.

          Reply
  9. Barkley Rosser

    Menzie,

    I have just seen that your longtime senior colleague at the LaFollette Institute, Bob Haveman, died on June 18 at age 85. I know he had still been professionally active up until recently. Sorry about the loss, a great guy, and a loss for the econ department and the Poverty Institute as well.

    Reply
  10. pgl

    https://www.msn.com/en-us/news/us/us-supreme-court-overturns-new-york-handgun-law-in-bitter-blow-to-gun-control-push/ar-AAYMyxV?ocid=msedgdhp&pc=U531&cvid=6f34f06149da4435ba9c5a687b945867

    US supreme court overturns New York handgun law in bitter blow to gun-control push

    WTF? Let me get this straight. Red neck states have the right to tell women that they do not have reproductive freedom but my state does not have the right to make sure some nut case or domestic terrorist brings a gun onto a subway and kill our residents for simply riding to work. This Court is major effed up.

    Reply

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