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Comment by ddebernardy | Hacker News Reader

> What does this all mean? To me, this bet is just a small extra piece of evidence in favor of the orthodox and blindingly obvious theory that Europe has higher unemployment than the U.S. because it has stricter labor market regulation.

Insofar as I'm aware it mostly means that US unemployment is under-reported.

The labor force participation rate has yet to fully recover from its pre-2008 levels, and you're not counted as unemployed if you worked an hour the previous week.

European countries, by contrast, have mostly not changed their definitions of unemployment since, and have a relatively sane definition of what it means to be employed. This is not to say it's perfect -- far from it. But at least they're not counting 1h/week Uber drivers as employed.

See e.g.:

https://qz.com/877432/the-us-unemployment-rate-measure-is-de...

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> European countries, by contrast, have mostly not changed their definitions of unemployment since, and have a relatively sane definition of what it means to be employed. This is not to say it's perfect -- far from it. But at least they're not counting 1h/week Uber drivers as employed.

To quote directly from an official EU website [0] (which I presume is how employment statistics is defined within the EU):

> Employment (persons in employment):

> Employed persons comprise persons aged 15 years and more who were in one of the following categories:

> (a) persons who during the reference week worked for at least one hour for pay or profit or family gain.

> (b) persons who were not at work during the reference week but had a job or business from which they were temporarily absent.

---

From reading how the US government defines employment/unemployment/labor force participation [1], the definitions appear to be materially the same (employed means working for at least one hour in the EU and for at least 1 second in the US or being temporarily absent, unemployed means not being considered employed and having actively looked for work in the last 4 weeks, and not being in the labor force means not being employed and not being unemployed).

[0]: https://ec.europa.eu/eurostat/statistics-explained/index.php...

[1]: https://www.bls.gov/cps/cps_htgm.htm

> From reading how the US government defines employment/unemployment/labor force participation [1], the definitions appear to be materially the same

They are the same. There are six different levels of unemployment which are measured and published regularly. One of them, U3, corresponds to what the UN uses and is the de facto international standard. Back in the 1990s, the BLS decided to start referring to this as the "official" unemployment rate instead of one of the other five, in order to adhere to a common standard.

This is a fun trope- "the US unemployment rate is made up and let me give you reasons it may not be accurate..."

Yes, turns out that there are a LOT of ways to measure this, and the people whose jobs it is to do so have chosen some, and even laid out the pros and cons of each of them. Yes, the definition of unemployment that you usually hear (U3) has things it doesn't count. But those choices were made intentionally because they thought it was more useful this way... not because they are too stupid to understand this, or because of a vast conspiracy.

> European countries, by contrast, have mostly not changed their definitions of unemployment since

The US has not changed the definitions of the six different levels of unemployment.

25 years ago, the BLS changed the headline statistic that they lead with from U5 to U3, in order to provide an apples-to-apples comparison with what the UN measures. That change was 14 years before 2008, and the BLS still publishes all six.

I don't think that's true - they're using a harmonized rate that is effectively measured the same way. Here's the original publication that the author is responding to:

http://cepr.net/documents/publications/US-EU-UR-2009-05.pdf

It'd be pretty silly of two professional economists to make a bet about two numbers that are measured differently. They know about U3 vs U6.

Also, I don't think anyone has changed their definitions of unemployment recently. BLS publishes all of them and the official rate has been U3 for like, 40 years or something.

Another important source of hidden unemployment is Social Security Disability.

It is the new welfare in parts of the south and Midwest where globalization has hit the hardest.

The U1-U6 measures of unemployment are all published. I'm sure we can match up to the closest measure in the EU. The article mentioned a harmonized unemployment rate so maybe there is something comparable.

For those interested in how the harmonized rate is defined across countries, the link below states it as:

the unemployed are persons of working age who, in the reference period:

− are without work,

− are available for work; and,

− have taken specific steps to find work.

More detail would probably be helpful, but the harmonized rate attempts to apply equally across countries. There may be methodological differences, but I doubt those differences would be stronger than the difference the author of TFA found.

https://www.oecd.org/sdd/labour-stats/44743407.pdf

It's worth noting that the economist John Quiggin didn't propose an adjustment for this in the bet.

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