Morning Must-Read: Robert Waldmann: Flows From Unemployment to Employment & Extended Unemployment Insurance

Robert Waldmann: Flows From Unemployment to Employment & Extended Unemployment Insurance: “I have long thought that the best guess of the matching function…

…is that hires of the unemployed are proportional to vacancies to the 0.7 times number unemployed to the 0.3. To be kind to the conservatives, I calculate the ratio of monthly flows from unemployed to employed to the square root of the product of vacancies and number unemployed. There isn’t any sign of a shift in January. One might claim that the increase in December was due to anticipation of the end of extended unemployment but I think that is nonsense (the failure to extend was a surprise). By the way, this shows I was wrong to be skeptical of claims that matching had worsened (based on the Beveridge curve) and that Krugman was right (I know you are shocked)…. There is little support for the conservative’s story. The data are noisy and I am looking at all of the unemployed not specifically those affected by the change, so Vinik is right it is hard to tell. But really, the conservatives don’t seem to have a case.