International unemployment rates: how comparable are they? (EXCERPT), Monthly Labor Review Online, June 2000

International unemployment rates: how comparable are they?

Constance Sorrentino

Comparative unemployment rates are used frequently in international analyses of labor markets and are cited often in the press. In the United States, the comparative levels are considered to be an important measure of U.S. economic performance relative to that of other developed countries. Comparative unemployment rates also provide a springboard for investigating the economic, institutional, and social factors that influence cross-country differences in joblessness.

The Bureau of Labor Statistics (BLS, the Bureau) has adjusted foreign unemployment rates to U.S. concepts since the early 1960s. Three other organizations—the Organization for Economic Cooperation and Development (OECD), the International Labor Office (ILO), and the Statistical Office of the European Communities (Eurostat)—also adjust national data on unemployment to a common conceptual basis. The resulting "standardized" or "harmonized" rates are intended to provide a better basis for international comparison than the national figures on unemployment offer.

The standardized rates, as currently published by the three organizations that make comparisons outside of Europe (BLS, OECD, and ILO), all show a similar result: a significant gap in unemployment rates between the United States, on the one hand, and Canada and Europe, on the other. In 1998, for example, when the U.S. unemployment rate was 4.5 percent, Canada’s rate was 8.3 percent, and the rate for the European Union was even higher, at 9.9 percent.¹ It is of interest to find out how much of this gap is attributable to measurement differences that may not have been accounted for. If the gap is due mainly to conceptual differences, then there is no reason to study why some countries appear to be doing better than others at keeping unemployment low.²

This excerpt is from an article published in the June 2000 issue of the Monthly Labor Review. The full text of the article is available in Adobe Acrobat's Portable Document Format (PDF). See How to view a PDF file for more information.

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Footnotes
1 The BLS comparisons program does not adjust rates for Canada or the European Union. Canada’s 8.3-percent rate is that country’s official figure, and the 9.9-percent rate quoted for the European Union is based upon the OECD Standardized Unemployment Rates program, derived from Eurostat figures. Note also that the OECD does not adjust the U.S. unemployment rate for comparability with EU concepts.

2 Explaining the non-measurement-related reasons for cross-country differences in unemployment is one of the main purposes of the project titled "Understanding Unemployment and Working Time: A Cross-Country Comparative Study," being conducted under grants from the Ford and Rockefeller Foundations. See the acknowledgments for more information.

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