by Laurent GUERBY
Sun Sep 16th, 2007 at 05:03:19 PM EST
Baker & al paper "Are Protective Labor Market Institutions at the Root of Unemployment? A Critical Review of the Evidence" page 5 cites OECD unemployment rate by sex and age: for example for male 25-54 the unemployment rate is 4.6% in the USA and 7.4% in France. The paper then continue using the employment measure without any further questioning of what the unemployment number means.
If one digs a bit more into OECD data, for the exact same sex/age group male 25-54 the employment to population ratio is 86.3% in the USA and ... 86.7% in France.
So the unemployment rate for this population is shown to be 60% HIGHER in France than the USA, yet MORE members of the population in question do have a job in France than in the USA (with similar part-time job rates).
This puzzle was shown to Baker in january 2007 and inserted into french and english wikipedia - where it is still present after many edits.
Raymond Torres, Head of the Employment Analysis and Policy Division, OECD, said to Le Monde (french newspaper) in may 2007 that "unemployment was a less and less relevant indicator to judge the job market efficiency".
Yet, as shown in the Baker paper, even economists who challenge the orthodoxy do not mention this piece of data when doing cross country so called "unemployment" surveys.
Are there authors who have a beginning of explanation of the puzzle I mention here? Why are economists still using the unemployment measure for anything?
If unemployment is used to measure some form of pressure in the job market, what are the transition rates for unemployed vs inactive to holding a job per unit of time?