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Big Data: Google Searches Predict Unemployment in Finland

Author

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  • Tuhkuri, Joonas

Abstract

There are over 3 billion searches globally on Google every day. This report examines whether Google search queries can be used to predict the present and the near future unemployment rate in Finland. Predicting the present and the near future is of interest, as the official records of the state of the economy are published with a delay. To assess the information contained in Google search queries, the report compares a simple predictive model of unemployment to a model that contains a variable, Google Index, formed from Google data. In addition, cross-correlation analysis and Granger-causality tests are performed. Compared to a simple benchmark, Google search queries improve the prediction of the present by 10 % measured by mean absolute error. Moreover, predictions using search terms perform 39 % better over the benchmark for near future unemployment 3 months ahead. Google search queries also tend to improve the prediction accuracy around turning points. The results suggest that Google searches contain useful information of the present and the near future unemployment rate in Finland.

Suggested Citation

  • Tuhkuri, Joonas, 2014. "Big Data: Google Searches Predict Unemployment in Finland," ETLA Reports 31, The Research Institute of the Finnish Economy.
    • Handle: RePEc:rif:report:31
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    File URL: http://www.etla.fi/wp-content/uploads/ETLA-Raportit-Reports-31.pdf
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    Citations

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    Cited by:

    1. Tuhkuri, Joonas, 2016. "ETLAnow: A Model for Forecasting with Big Data – Forecasting Unemployment with Google Searches in Europe," ETLA Reports 54, The Research Institute of the Finnish Economy.
    2. Engels, Barbara, 2016. "Big-Data-Analyse: Ein Einstieg für Ökonomen," IW-Kurzberichte 78.2016, Institut der deutschen Wirtschaft (IW) / German Economic Institute.
    3. Tuhkuri, Joonas, 2016. "Forecasting Unemployment with Google Searches," ETLA Working Papers 35, The Research Institute of the Finnish Economy.
    4. Anttonen, Jetro, 2018. "Nowcasting the Unemployment Rate in the EU with Seasonal BVAR and Google Search Data," ETLA Working Papers 62, The Research Institute of the Finnish Economy.

    More about this item

    Keywords

    Big Data; Google; Internet; Nowcasting; Forecasting; Unemployment; Time-series analysis;
    All these keywords.

    JEL classification:

    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • C82 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Macroeconomic Data; Data Access
    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications

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