Economists Just Can't Figure Out This Unemployment Thing

Would you like to play get the economist? Reading Chicago economics prof Casey Mulligan trying to make sense of job losses in the recession is fun for everyone.

It’s this kind of fun: “Payroll spending now exceeds what it was when the recession began, yet employment remains millions lower. Apparently, payroll spending is not enough to bring those jobs back.” Hmm, if only I could find a model that accounts for that! Is there any conceivable reason that there would be fewer people making, all told, more money in America today?

This is what happens when people start working with pure numbers: real-world motivations stop making sense.

Then there’s a particularly unpersuasive chart (dealing as it does in percentages, rather than actual numbers) of people who “chose” to earn more or less after September 2009. Oh, good day, sir! And readers should make sure to leave before they get to this pure-numbers clap-trap: “Unemployment insurance reduces incentives for unemployed people to accept a new job….”