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August 1995, Vol. 118, No. 8
S even unemployment indicators, known as U-1 to U-7, for nine major industrial countries were presented in the March 1993 issue of the Monthly Labor Review.1 The data in the initial analysis covered just the year 1989. The indicators have a large cyclical component, and international relationships might change, depending on the phase of the business cycle in each country. To investigate these relationships further, this article presents data for a series of years, spanning relatively high and low employment periods from 1983-1993.
The sequence of indicators U-1 to U-7 illustrates a range of unemployment measures going from a very narrow to a very broad view. Under this framework, U-5 is the official, usually cited U.S. employment rate, referred to as the conventional measure here. U-1 through U-4 narrow in on certain types of unemployment that reflect parts of U-5, while U-6and U-7 portray broader concepts of underutilization than U-5, respectively bringing into consideration persons working part time for economic reasons and discouraged workers.
In general, this article reinforces the findings of the 1993 one. The principal finding of that study was that Japan and Sweden, the countries with the lowest unemployment rates as conventionally measured, had by far the largest increases when the definition was expanded to include persons working part time for economic reasons and discouraged workers. This continued to be the case. The current study shows that, in times of recession and recovery alike, the Japanese unemployment rate consistently tripled when these additional measures of underutilization of labor were incorporated. For Sweden, the most inclusive indicator more than doubled until 1992-93, when labor market conditions deteriorated drastically and the conventional rate jumped sharply, resulting in some closing of the differential between the conventional and expanded rates.
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1 Constance Sorrentino, "International comparison of unemployment indicators ," Monthly Labor Review, March 1993, pp. 3-24.
Employment outlook in OECD countries. September 1991.
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