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BPEA Article

Testing for and Removing Bias in the Seasonally Adjusted Unemployment Series

Abstract

IN EACH POSTWAR recession the official seasonal adjustment of the unemployment statistics has been called into question. The official procedure adjusts the major demographic components of the volatile monthly unemployment series by given percentages that change little from year to year.' This suspect multiplicative model remains basically in command, but the Bureau of Labor Statistics now issues alternative estimates including those based on additive and "residual" models of seasonal correction. The unofficial additive model uses absolute monthly adjustments to unemployment that also change only slightly each year. The estimate of seasonally adjusted unemployment from the unofficial residual model is then the difference between the relatively stable employment and labor-force series, after each is adjusted by the official multiplicative procedure. These alternative official series, just as they did in previous recessions.

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