Institutional changes, reported unemployment, and induced institutional changes

Changes in the measurement of official employment statistics may be brought about by a number of government actions and institutional factors. Work registration requirements that accompany various federal welfare programs are a significant cause of measurement error. The high rate of unemployment as measured in recent years can be attributed in large part to a number of federal programs that cause recipients to report themselves as unemployed when they are not seeking work, or to engage in activities prolonging the period of unemployment. These individuals were not previously included in the labor force but are now counted in the official unemployment statistics. Data taken from population surveys show that the unemployment rate for those individuals on welfare programs with work registration requirements is significantly higher than the rate for members of the same income class who do not participate in programs with such requirements. Meausred levels of unemployment are used by legislators in policy-making related to federal spending and to the allocation of funds to state and local areas.