[Joseph_E._Stiglitz,_Carl_E._Walsh]_Economics(Bookos.org) (1)

14
12
France
UNEMPLOYMENT RATE (%)
10
8
6
4
Germany
U.S.
U.K.
2
Japan
0
1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001
Figure 22.3
COMPARISONS OF
INTERNATIONAL
UNEMPLOYMENT
2003
In some developed countries, the unemployment rate has been higher than in the United
States during the past 25 years. Japan’s unemployment rate averaged much less than
other countries over this period.
SOURCE: Economic Report of the President (2004).
the U.S. labor force was unemployed. The unemployment rate among those who
worked in manufacturing was even higher—at one point, one out of three workers
in manufacturing had lost their jobs.
In recent years, unemployment in other countries often was worse than in the
United States (Figure 22.3). In the 1960s, U.S. unemployment rates exceeded those
in other major industrialized economies; but European unemployment rates rose
dramatically during the 1980s and generally now exceed the rate in the United States.
Japan historically has had very low levels of unemployment, but in 1999 the unemployment
rate in Japan surpassed that of the United States for the first time.
Unemployment in many developing countries is more than 20 percent.
One problem with the unemployment measure is that many individuals are discouraged
from even looking for a job, especially in a prolonged downturn. Because they
are not actively seeking employment, the statistics will not count them as unemployed
and thus underestimate the number who would choose to work if a job were available.
The fraction of the working-age population that is employed or seeking employment
is called the labor force participation rate. Because of the effect of discouraged workers,
the labor force participation rate tends to decline in recessions and rise in booms.
FORMS OF UNEMPLOYMENT
Even when output is equal to potential, unemployment is not zero. To understand
why, we must distinguish between different kinds of unemployment. Economists
define four: seasonal, frictional, structural, and cyclical.
UNEMPLOYMENT ∂ 501