What Should We Ask of a Candidate? A Contribution to the Discussion on the Unemployment Rate

Abstract

This paper presents three exercises in order to evaluate the discrepancies between the unemployment rate estimated by the Department of Economics of the University of Chile and the National Bureau of Statistics (INE). It is shown that the discrepancies cannot be explained by differences on the questions for eliciting information on employment situation. Furthermore, we show that the historical differences among estimators are significant, but more importantly, that the dynamic relation between both rates and the rate of growth of the economy is also very different. Based on this observation and a theoretical model, we show that the unemployment rate reported by the University of Chile is a more useful candidate for characterizing the referred phenomenon.