Friday, September 21, 2012

Comparison of International Unemployment Rates

The main source of unemployment rates in the European Union (EU) is from Eurostat. Eurostat has done much work over the past two decades to assure that all EU nations measure their labor force statistics in a similar way. They work with organizations like the U.S. Bureau of Labor Statistics to attempt to make labor force statistics comparable.

When digging into the details of how things are defined in the surveys, there are subtle differences. In the U.S. people are counted in the labor force if they are ages 16 and older and are not currently in the military. To be counted as unemployed, job seekers must have been contacting employers and pounding the pavement to find work in the past four weeks. Otherwise, a person would not be counted as unemployed and would be dropped from the labor force. We call people in that situation discouraged workers, and they are not counted in the official unemployment rates published in the U.S.

In the EU and Canada, people are included at age 15 and career military persons are also counted in the labor force. If you are out of work in the EU or Canada and have only been looking at help wanted ads in the paper or online in the past four weeks, you would be counted as unemployed. Characterizing the differences in U.S. and EU unemployment rates is not comparing apples to oranges. It is more like comparing Granny Smith apples to Red Delicious apples.

The U.S. Bureau of Labor Statistics (BLS) tracks international unemployment rates in its International Labor Comparisons program. In addition to providing unemployment data from Eurostat, the BLS program also provides unemployment rates that are adjusted to U.S. concepts for nine countries in addition to the U.S. The countries included are: Australia, Canada, France, Germany, Italy, Japan, Sweden, the Netherlands, and the United Kingdom. The chart below illustrates these rates, with each column representing a collection of monthly unemployment rates between January 2007 and July 2012. 

You can find more information on this topic from Eurostat, the BLS International Labor Comparisons page, or by contacting Regional Economist Pat O'Connor, who authored this comparison study.

No comments: