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Econ 410 - 2021 Fall - Lecture 4
Econ 410 - 2021 Fall - Lecture 4
Econ 410 - 2021 Fall - Lecture 4
Yoon J. Jo
Fall 2021
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Today
• Unemployment rate
• HW 1 due now.
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Unemployment Rate
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Categories of population (age 16 or above)
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For those non-employed
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Discouraged workers
Notice that a person who wants a job but has given up looking - a dis-
coraged workers - is counted as not being in the labor force.
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Unemployment rate
Q. Why is unemployment rate different from non-employment rate?
Number of Unemployed
Unemployment rate = ×100
Labor Force
Employed
Non-employment rate =(1- )×100
Adult Population
40
8
38
6
36
4
1980 1985 1990 1995 2000 2005 2010 2015
Year
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Unemployment rate
Number of Unemployed
Unemployment rate = ×100
Labor Force
Labor Force
Labor force participation rate = ×100
Adult population
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Labor force participation rate
Labor Force
Labor-Force Participation Rate = ×100
Adult Population
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Younger men exhibited a larger decline in work hours than older men or
women.
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Video Games
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Macroeconomic data during the Covid Pandemic:
Inflation
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CPI Inflation
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CPI Inflation
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CPI Inflation
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CPI Inflation
• The consumer price index jumped 5.4% from a year earlier, the
largest increase since before the worst of the financial crisis,
• Prices of used cars and car rentals led the increase in overall
prices.
• For the 12-month period, used car and truck prices leaped 45.2%,
while car and truck rental costs skyrocketed 87.7%.
• Public transportation, which includes airline fares, recorded a
17.3% jump year over year, while lodging away from home
including hotels and motels saw a 16.9% year-over-year burst.
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CPI Inflation
• NY Times article(Link)
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CPI Inflation
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CPI Inflation
• Increased demand
I Rebound in the economy
I Opportunity to spend the stimulus funds
• Supply disruptions
I Mismatch between supply and demand.
I Car production has been limited by a computer chip shortage. Rapid
demand and constrained supply have sent the cost of used cars
soaring in recent months.
I Pandemic restrictions closed many factories and shipping routes
around the globe.
I Other supply issues: Texas winter storm in Feb, 2021 shut down
production of many petroleum-based products that affect multiple
industries like foam for furniture or resin for PVC pipes in
construction. Gasoline prices elevated from shortages caused
during the Colonial Pipeline shutdown.
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CPI Inflation
• Increased demand
I Rebound in the economy
I Opportunity to spend the stimulus funds
• Supply disruptions
I Mismatch between supply and demand.
I Car production has been limited by a computer chip shortage. Rapid
demand and constrained supply have sent the cost of used cars
soaring in recent months.
I Pandemic restrictions closed many factories and shipping routes
around the globe.
I Other supply issues: Texas winter storm in Feb, 2021 shut down
production of many petroleum-based products that affect multiple
industries like foam for furniture or resin for PVC pipes in
construction. Gasoline prices elevated from shortages caused
during the Colonial Pipeline shutdown.
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Review: CPI vs. GDP deflator
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CPI during the pandemic: Case study (Cavallo, July
2020)
• Reading: (Link)
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CPI during the pandemic: Case study (Cavallo, July
2020)
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CPI during the pandemic: Case study (Cavallo, July
2020)
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CPI during the pandemic: Case study (Cavallo, July
2020)
• The first column shows a comprehensive list of all the CPI
categories that compose the all-items index. The second column
shows the monthly CPI sector inflation for that month. The third
and fourth columns show the CPI and Covid weights. Finally, the
last two columns show the incidence that each category has on the
total inflation rate.
• Table 2 shows that the US Covid inflation rate was higher in April
because there was more weight in categories that had a positive
inflation rate, and less weight in categories experiencing significant
deflation. In particular, the weight for “Food at Home” rose from
7.58% to 11.28%, increasing the incidence of this category by
0.1%. At the same time, the weight for “Transportation” fell from
15.74% to 6.25%, increasing the incidence on the total monthly
inflation rate by about 0.47%.
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CPI during the pandemic: Case study (Cavallo, July
2020)
• CPI and Covid CPI have nearly identical inflation rates in Jan and
Feb, 2020. Divergence in following months due to change in
weights.
• Study ends with data in May 2020, where annual inflation with
Covid basket was 0.95% and only 0.13% with official CPI weights.
• Difference due to consumers spending more on food and similar
categories experiencing inflation and less on transportation and
related categories with significant deflation.
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CPI during the pandemic: Case study (Cavallo, July
2020)
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Macroeconomic data during the Covid Pandemic:
Unemployment
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Unemployment rate
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Unemployment rate by sector
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Unemployment rate by sex and age
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Unemployment rate by education
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Labor force participation rate
The labor force participation rate declined to 60.2% in April 2020—a
level not seen since the early 1970s—then began a partial recovery in
May 2020.
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Labor force participation rate: Male vs female
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Parental LFPR in the pandemic: Case study (Lofton,
Petrosky-Nadeau, and Seitelman, April 2021)
• Reading (Link)
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Parental LFPR in the pandemic: Case study (Lofton,
Petrosky-Nadeau, and Seitelman, April 2021)
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Parental LFPR in the pandemic: Case study (Lofton,
Petrosky-Nadeau, and Seitelman, April 2021)
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Parental LFPR in the pandemic: Case study (Lofton,
Petrosky-Nadeau, and Seitelman, April 2021)
In occupations with flexible work schedules like management, ratio of mothers’
to women’s employment did not change significantly during the pandemic. In
contrast, occupations with rigid work schedules—such as education—saw
pronounced declines in mothers’ relative to women’s employment within the
same occupation.
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Why not GDP?
• Even monthly data, like CPI and unemployment rate comes with a
month delay.
• During the pandemic, the situation is fast moving so we need data
at higher frequency and without delay.
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Sources for macroeconomic data
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