More school, more work

By Razib Khan | September 5, 2010 12:11 pm

Tomorrow is Labor Day in the USA. I was actually shocked to realize last week that the USA has a higher unemployment rate than many European nations. I grew up in the 1990s when we were conditioned to assume that Europe would always have higher structural unemployment for a variety of reasons. In any case, I decided to look at some employment-related data in Google Public Data Explorer. Below on the x-axis are the employment rates for a selected number of nations over time, and on the y-axis the employment rates for the 15-24 age group. The employment rate in the first case is simply the proportion in the age range 15-64 who are in employment. Note the change in the relationship of the two values over time. I’ve highlighted the USA, the Netherlands, Sweden, Greece, and Mexico, to show you their movement across the grid.

Let’s limit the x-axis to women only:

I think what you’re obviously seeing are two general trends: women entering the labor market and the transition from the single-income household to the two-income household, as well as a balance in the younger age brackets through the fact that many more youth are pursuing higher education. So the y-axis is more stable, as the shift toward females in the labor market is balanced by a higher proportion going to university. The changes in some nations like the Netherlands are really striking.

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Comments (12)

  1. JL

    Bryan Caplan is a bit nervous about his bet that average European unemployment will be at least 1.5 percentage-points higher than average U.S. unemployment over the next decade:

  2. Kate

    A note about the Netherlands:
    I’m an American woman professional living and working in the Netherlands. The rapid change that you see in the Netherlands woman’s employment rates doesn’t tell the whole story. Many, many of the Dutch women only work part time. In fact, only about 30% of Dutch women (married or not, kids or not) work full time. Part time work is very much pushed here in the Netherlands to increase employment, but still meeting the Dutch societal goal of keeping the mother at home with the kids.

  3. benj

    You can thank Obama, Krugman and the silly faith in Keynesian economics that have been proven wrong since at least the 70’s. Public spending does not “stimulate” anything, on the contrary. The best thing the Obama stimulus may have done is nothing (but increasing the debt).

    Of course, Bush economics were not great. He did increase public spending and deficits. But not to that level.
    Now, we have theoretical and empirical evidences that reducing public spending is the best way to stimulate the economy: Israel, Canada, Germany for example just did that lately and it worked even better than expected (and a few other countries I forgot). On the other hand, increasing public spending never works.

  4. benj, thanks for saying what i’ve seen said on 1,000 other blogs. won’t be too surprised if i hear the 1,000th rebuttal to your argument on this comment thread, which i’ve also seen on 1,000 other blogs. an A+ for fidelity, and F- for originality, i guess 🙂

    kate, thanks for telling me something i wasn’t aware of. my understanding that this sort of mobilization of women for the labor market isn’t atypical for much of northern europe.

  5. toto

    Razib: the truly shocking part of the first graph is that Sweden had a higher employment rate than the US for much of the last fifty years!

    Benj: wow.

  6. Sandgroper

    benj, check Australia, which negates what you have said. And if you respond that Australia has dodged the recession because of exports to China, then check China, which also negates what you have said.

  7. benj

    No it does not negate what I said because one single case is not enough to make a point. I don’t know Australia but from what I see, it has a very low debt and relatively low public spending, so on the face of it on the contrary it does prove my point.

  8. I was surprised looking at the Wiki link to see that Iceland had such a low unemployment rate. I thought all their banks had gone under and the British government was putting the screws to them.

  9. Surfer

    Why dont you factor in the proportion of the adult population that the US imprisons, see what that does to you figures

  10. Matthew

    benj, you are confusing low debt with low spending when you say Australia confirms your point of view. Yes, we have low debt due to a long period of fiscal responsibility – unlike the profligate spending of the Bush government. But during the GFC our government delivered very large (relative to the size of our economy) stimulus in the form of direct payments to the public, and large infrastructure projects. The handouts to the public had an immediate and obvious effect in the form of a boost to the retail sector. The infrastructure projects prevented the construction industry from mass unemployment. Many people have pointed at the mining sector as being responsible for ‘saving’ Australia – but the reality is that mining suffered large falls in employment, dropping nearly 20% of their workforce, and besides that fact mining makes up only about 7% of Australia’s GDP.

    There is no doubt at all that fiscal stimulus works when the rest of the economy is struggling. The problems the US is having stem from the fact that you are already massively in debt and have less room to increase deficits. You also have severe problems in your housing market that are not related to government spending. Your entire economy has been based on borrowed money, public and private for at least 2 decades – and now you are being forced to deleverage.

    It is bizarre that Americans seem unable to realise that the only way they will ever be able to pay back their debts is raise revenue. This will have to come in the form of increased taxes because your economy will never grow fast enough to allow the debt to paid without them

  11. jld

    It is bizarre that Americans seem unable to realise that the only way they will ever be able to pay back their debts is raise revenue.

    What makes you think that Americans will ever be able to pay back their debts?
    (or even intend to)


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About Razib Khan

I have degrees in biology and biochemistry, a passion for genetics, history, and philosophy, and shrimp is my favorite food. In relation to nationality I'm a American Northwesterner, in politics I'm a reactionary, and as for religion I have none (I'm an atheist). If you want to know more, see the links at


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