Saturday, February 8, 2014

The End of EUI in North Carolina and Unemployment (Pt. 2)

Andrew Hofer linked to my last North Carolina post on the change in unemployment, and noted "These suggest a higher level of work discouragement than I would have expected."  That made me realize that I had been lazy with that post.  I should have also included labor force participation and employment-population ratios.

Here was the histogram of the change in the unemployment rate, by state, from July to December 2013.

Below, I have added the histograms for the labor force participation rate and for the employment to population ratio.

LFP has declined slightly more than average in North Carolina, but EPR has increased slightly more than average.  Both of these changes would create a lower unemployment rate.  Roughly 2/3 of the excess relative unemployment decline came from a relative increase in employment and roughly 1/3 came from a relative decline in labor force participation.

 I don't think it is appropriate to identify all of these labor force exits as "discouragement" without more information.  The comparison to the aggregate national numbers also suggests that more of the recent labor gains in North Carolina have been due to employment growth.

The end of EUI in North Carolina was coincident with a steeply falling unemployment rate.  It looks like most of that has been related to relative employment growth, but there could be a range of possible weights.


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