Monday, September 26, 2011

Unemployment rates dissected

Dave Nicklaus has a very interesting post that breaks down unemployment in various ways: race, education, duration.  The highlights include
  • St. Louis has been following the country,
  • the black unemployment rate is double that of whites,
  • the unemployment rate for those without a high school diploma is triple that of those with a bachelor's degree, 
  • and more than 80 percent of the unemployed have been so for more than six months.
Don't bother trying to sort out the Humpty Dumpty vs. deflated balloon analogy.  It's based on the wrong supposed structural issues, such as labor-market mismatch.  Those things sort themselves out and are symptoms, not causes (it's important to distinguish between endogenous and exogenous variables).  The structural impediments to recovery are mostly government-imposed restrictions that prevent the market from adjusting.