Mon Jun 26th, 2006 at 06:29:09 AM EST
I've been accused recently of everything up to and emulating UFO believing conspiracies recently for trying to understand and illuminate the reality of unemployment and employment. I've been told to simply use the existing statistics, that I should trust the experts at the OECD despite the fact that the statistics in question give only a partial picture, something that is abundantly clear if you actually read the reports of those experts in detail.
Unemployment statistics measure something very precise, cheap and easy to measure: the number of people who have recently looked for a job and failed to get one. They neglect all sorts of other people who are, for any reason, no longer looking for a job. This ranges from those on disability benefits who may be forbidden from looking for a job to those who have retired early because they can to parents staying at home because they want to raise their families to parents staying at home because it is uneconomic to work and pay for their young children to be minded to myriad other cases. Nor do unemployment statistics take into account differences in the choices that countries make which affect the composition of the labour force: a large military and prison population in the US, massive free education in France, training schemes and so on across Europe. Not to mention emigration and immigration.
Comparing labour markets without taking into account all those factors is impossible. The official OECD unemployment rate takes the simplest possible measure and ignores everything else. It can tell you something about changes in the labour market within a country but it's not an effective way of assessing differences between them. It is useful, if it's not manipulated by government policy, as a measure of how an economy is performing: dropping unemployment generally does mean that more jobs are being created in an economy. Rising unemployment isn't a good sign: even the aliens agree on that.