Back in the late 1990s, it was "job insecurity" that made Greenspan sanguine about low unemployment levels. But Greenspan's take on it was pretty trivial compared to the assessment by Bluestone and Sharpe:
"The initial hypothesis motivating the project, namely that a significant portion of
the inter-country differences in reported unemployment rates could be explained by differences in the methodology and definitions, proved incorrect. Over the past decade, we found that great strides have been made by international statistical agencies to standardize the methodology and definitions used to calculate labor market statistics. Our best estimates suggest that in the late 1990s only 20 percent of the difference in unemployment rates between the United States and Canada and only about 10 percent of the difference between the United States and Europe could be attributed to differences in methodology and definition.
"But our research turned up something much more important. While the actual
statistics on labour force performance were comparable, we found that unemployment has very different meanings across countries. Because of differences in unemployment insurance systems, social welfare programs, and the extent of underground economy activity, the same unemployment rate (even measured in exactly the same way) does not mean the same thing in each country. Italy's 20-25 percent unemployment rate in its southern region is not comparable to what such a high rate would be in the United States.The same is true of Spain's 16-18 percent experienced in the late 1990s. Media focus on
differences in unemployment rates across countries fails to recognize this fact. Debates over public policy often fail to recognize this as well.
"Even more importantly, the project found that the unemployment rate is no longer an adequate measure of labor market capacity, economic performance, or social wellbeing. Ironically, just as more and more energy has been devoted to collecting labour market statistics that are more comparable across countries, fundamental changes in the structure of the labour market in all of our countries have made these statistics less and less relevant as measures of capacity, performance, and well-being.
"When the standard labour market statistics were first refined soon after World War II, almost all jobs were full-time; the typical job was in manufacturing or construction; most workers were male; and fewer workers (outside of agriculture) were self-employed. Over the years, the structure of the labour market has changed markedly. Instead of the simple three-dimension categorization of "employed-unemployed-out of the labor force" which still underlies standard statistics, there is now a broad spectrum of labor market status. Hours of work per day, per week, and per year differ dramatically between individual workers; the combining of dependent and independent (self-employed) work has increased; and a growing underground economy in some countries (related to changes in tax rates and labour market regulations) all have profound effects on the usefulness of the standard statistics for measuring capacity, performance, and well-being."
...and by Osberg and Sharpe (same project):
"This paper therefore focuses on the well-being of individuals as workers. The
proposed Index of Labour Market Well Being (ILMW) covers all persons of working age and is based on: 1) the average current return from work; 2) the aggregate accumulation of human capital, which enables future returns from work; 3) inequality in current returns from work; and 4) insecurity in the anticipation of future returns from work.
<snip>...
"One commonly used indicator for summarizing labour market well-being is the unemployment rate, but this report finds virtually no relationship between the unemployment rate and the ILMW: Belgium is a high unemployment country but ranks among the best scores according to the ILMW, while the United States has a low unemployment rate but scores poorly with the ILMW."
Obviously this stuff parallels the critique of the GDP by the Redefining Progress GPI, for example.
The Sandwichman
Michael Perelman <[EMAIL PROTECTED]> wrote:
"The initial hypothesis motivating the project, namely that a significant portion of
the inter-country differences in reported unemployment rates could be explained by differences in the methodology and definitions, proved incorrect. Over the past decade, we found that great strides have been made by international statistical agencies to standardize the methodology and definitions used to calculate labor market statistics. Our best estimates suggest that in the late 1990s only 20 percent of the difference in unemployment rates between the United States and Canada and only about 10 percent of the difference between the United States and Europe could be attributed to differences in methodology and definition.
"But our research turned up something much more important. While the actual
statistics on labour force performance were comparable, we found that unemployment has very different meanings across countries. Because of differences in unemployment insurance systems, social welfare programs, and the extent of underground economy activity, the same unemployment rate (even measured in exactly the same way) does not mean the same thing in each country. Italy's 20-25 percent unemployment rate in its southern region is not comparable to what such a high rate would be in the United States.The same is true of Spain's 16-18 percent experienced in the late 1990s. Media focus on
differences in unemployment rates across countries fails to recognize this fact. Debates over public policy often fail to recognize this as well.
"Even more importantly, the project found that the unemployment rate is no longer an adequate measure of labor market capacity, economic performance, or social wellbeing. Ironically, just as more and more energy has been devoted to collecting labour market statistics that are more comparable across countries, fundamental changes in the structure of the labour market in all of our countries have made these statistics less and less relevant as measures of capacity, performance, and well-being.
"When the standard labour market statistics were first refined soon after World War II, almost all jobs were full-time; the typical job was in manufacturing or construction; most workers were male; and fewer workers (outside of agriculture) were self-employed. Over the years, the structure of the labour market has changed markedly. Instead of the simple three-dimension categorization of "employed-unemployed-out of the labor force" which still underlies standard statistics, there is now a broad spectrum of labor market status. Hours of work per day, per week, and per year differ dramatically between individual workers; the combining of dependent and independent (self-employed) work has increased; and a growing underground economy in some countries (related to changes in tax rates and labour market regulations) all have profound effects on the usefulness of the standard statistics for measuring capacity, performance, and well-being."
...and by Osberg and Sharpe (same project):
"This paper therefore focuses on the well-being of individuals as workers. The
proposed Index of Labour Market Well Being (ILMW) covers all persons of working age and is based on: 1) the average current return from work; 2) the aggregate accumulation of human capital, which enables future returns from work; 3) inequality in current returns from work; and 4) insecurity in the anticipation of future returns from work.
<snip>...
"One commonly used indicator for summarizing labour market well-being is the unemployment rate, but this report finds virtually no relationship between the unemployment rate and the ILMW: Belgium is a high unemployment country but ranks among the best scores according to the ILMW, while the United States has a low unemployment rate but scores poorly with the ILMW."
Obviously this stuff parallels the critique of the GDP by the Redefining Progress GPI, for example.
The Sandwichman
Michael Perelman <[EMAIL PROTECTED]> wrote:
Because of imports, less unemployment means that inflation is not as
much of a problem.
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