Unemployment will rise. But it won’t tell the whole coronavirus story.

By Ernie Tedeschi

The coronavirus shock will lead to a dramatic spike in the unemployment rate. But even this surge could understate the true labor market damage from the virus. This is because:

1. the emergency unemployment insurance benefits passed as part of the CARES Act temporarily relaxed the eligibility requirement that workers be actively looking for work; this will cause at least some of the labor supply response to be along the nonparticipation margin rather than the unemployment…