Stephen Hill has a post on this website criticising the use of the youth unemployment rate as a measure of the extent that joblessness amongst young people is an economic and social problem.
Unfortunately he goes way over the top in a number of regards, notably the claim that: “Economists don’t know how to measure youth joblessness”
Stephen is right that the use of the unemployment rate – which is defined as the unemployed divided by the sum of those in work plus those actively looking for work – can be misleading. Many young people are neither unemployed nor in work, they are in education. So even if a small proportion of all young people in an economy is unemployed, the youth unemployment rate can be high if few youngsters are in work while most are still in education. As he says this can distort international comparisons.
While Stephen Hill may have recently stumbled over this fact, he is wrong to claim that “economists’ (who apparently are all the same) are not well aware of this issue. For example in a recent post on unemployment in Europe I pointed out that the figure for Spanish youth unemployment referred only to those not in education).
In fact there are a whole lot of related measurement ‘issues’ that require careful interpretation and comparison: for instance the definition of ‘employed’ is having worked just one hour during the week prior to the survey. Labour market economists and to some extent also macroeconomists are aware of these issues and use a whole range of indicators to assess the state of labour markets (e.g. employment rates, full-time equivalents, broader measures of labour underutilisation). Each of these measures has its value, but must be interpreted the right way.
It is not helpful to jump on one imperfect indicator and then trumpet that all ‘economists’ are dumb. I make this point not to bash Stephen Hill, who has written much that is worth reading on the crisis and on European integration. I am getting tired of these blanket accusations that a whole professional group is some mix of blind and stupid, and of the repeated erection of straw men by people who don’t take the time to find out what others are actually saying. I was at a conference recently where this appears to have become a sort of sport. (I accept that the pre-crisis arrogance of some economists vis-a-vis other social scientists constitutes a mitigating factor.)
Two prominent examples (which are also mentioned in Stephen Hill’s column) are the GDP/welfare debate and ‘economists didn’t see the economic crisis coming’ routine. But (most) economists know what GDP is (the sum of goods and services produced in a period in a geographical region) and what it is not (an aggregate measure of human welfare or ‘happiness’). And leading economists (such as Sen and Stiglitz) and oft-maligned economic institutions (such as the OECD) have been exploring these measurement issues.
And predicting crises is hard. Political scientists, as a group, didn’t see the collapse of the Soviet Bloc or the Arab Spring coming, but that doesn’t mean they are all idiots. If everyone predicts a crisis it probably won’t actually happen, because counter measures would be taken, and so the prediction would be ‘wrong’. (This is the opposite of what happened to Marx, who deduced the inevitability of system-transforming crises – correctly in terms of the economic institutions at the time – but did not see that measures would be taken to stabilise the system, not least as a consequence of his own predictions.) A severe crisis is, in short, not predicted almost by definition.
Just to be clear, I have long held the the view – espoused in the current debate perhaps most effectively by Paul Krugman – that economics, as practiced in recent decades by most academic economists, is deeply flawed in many ways. But Krugman knows academic economics inside out. I have written a lot about the sort of rethinking in economics that I believe is necessary in the light of the crisis (e.g. here, pdf). But it takes more than straw men and unoriginal critiques to make that point. And it requires some differentiation between different economic paradigms.
It is good that economists are no longer seen as natural scientists with a well-functioning and reliable ‘model’ of the way our economies and societies actually work (and implicitly how they should be made to work). But that does not make them (all) fools.
Update: See comments for a response from Stephen and my answer, plus a number of other interesting comments from readers.
This column is part of a project on youth unemployment in Europe run by the Friedrich-Ebert-Stiftung and Social Europe Journal.
All Content
Andrew, you state many valid points, and as I read your response it seems that you are endorsing my analysis that the current method used for determining youth unemployment rates is deeply flawed. For the record, I did not “recently stumble upon this fact,” as you stated (somewhat derisively), but in fact I challenged this methodology back in 2006 when it was used to falsely depict French youth unemployment (overstating it at alarming levels), and I also challenged this methodology in my book published in 2010, “Europe’s Promise: Why the European Way is the Best Hope in an Insecure Age.” Despite your endorsement of my critique, what seems to stick in your craw the most is that you believe that I have been too sweeping in my indictments of the economics profession, and that I have not acknowledged that at least a few individual economists have performed above the average in the profession.
I suppose you’re right about that, but I can’t help but chuckle over the fact that you seem more upset over my criticism of the economics profession than you are over the flawed method being used to calculate youth unemployment. The fact is, in post after post, article after article, whether by Nobel Prize winners or Social Europe Journal authors participating in a project on youth unemployment, writers are uncritically regurgitating the “50% youth unemployment rate.”
Thank you for pointing out that in your post on Social Europe Journal back in January you got this right. I have to confess that I missed that one, there’s a lot to read and keep up with. And unfortunately not enough people read your piece to change the public discourse on this (and your article hardly critiqued the traditional method being used, it only mentioned the discrepancy in passing). As I’m sure you would agree, I can show you far more posts/writers on Social Europe Journal who have been getting this wrong. And throughout the media, in article after article, the 50% youth unemployment rate has been hammered into everyone’s heads to the point where it is conventional wisdom. Would you agree?
Here’s what I suspect is going on: it’s all ideological. The Social Europe Journal and its many writers, as well as economists like Krugman and Stiglitz, are all of the opinion that European leaders are not doing enough to stimulate the economy and create jobs. While I tend to agree with that assessment – though with some important qualifiers that I have elucidated in my Social Europe Journal column over these many months – it seems to me that most of your colleagues are regurgitating the “50% youth unemployment” figure because it sounds alarming and it reinforces their broader agenda. While I am sympathetic to that agenda, I’m not sure uncritically repeating a distorted measurement or deploying intellectual dishonesty is the best means to get to that ends. Would you agree?
Or, if you think the use of the 50% figure is not ideological, then why is it, would you say, that so many of your colleagues are not employing the sort of critical thinking and qualifiers that you used in your January article, but instead are simply regurgitating that 50% figure over and over?
So while I hear your criticism that I’m being too harsh on the “economics profession,” and not acknowledging differences among individual economists, I would turn that around to you and say: why aren’t you and more of your colleagues challenging each other on a basic measurement that so many economists as well as columnists, pundits and journalists are getting so wrong so often?
I question what the point of your post is when you write, “But it takes more than straw men and unoriginal critiques to make that point.” Straw men? Unoriginal critiques? By writing that, you seem to be prioritizing a stirring defense of your profession over that of having a rational discussion over best ways to calculate unemployment. In your defensiveness, you also seem to be denigrating my analysis that earlier in your post you seemed to indicate is valid. Whatever. I guess my basic message to you and other economists would be: police your own, if you don’t like stinging criticisms of the ineptitude of your profession. I look forward to more of your posts challenging your colleagues over their constant regurgitation of a figure that is based on a flawed methodology. (For example, when this flawed methodology was used back in 2006 to overestimate youth unemployment in France, did you point out that the methodology being used was distorting the true picture?)
Now that we have each exercised our bile, perhaps we can have a quality discussion. As my article points out, the problem is that the profession is using a methodology for youth unemployment rates that were derived for adult unemployment rates, yet it’s comparing apples and oranges. A far higher percentage of young people are not included in the “labor force” because they are in school/training and therefore not available for full-time work. And this is leading to confusion and misrepresentation of reality.
The dilemma as to methodologies can be made even clearer by using a more extreme example: say there are 100 youth in the labor force and two of those are unemployed – an unemployment rate of 2%. Very low, yes? And nothing to be alarmed about?
But then let’s say 96 of those youth suddenly go to school and are no longer in the labor force, leaving four youth in the labor force. Two of them are still unemployed, so the unemployment rate is 50%. Two out of four people “looking for work” can’t find it, and so suddenly the headlines report “50% youth unemployment.” And the alarms go off. Yet it’s still only two youth who are unemployed. When people hear “50% youth unemployment” they think it means the same as “50% adult unemployment”, when it doesn’t mean the same thing at all. These important distinctions are left out of the discussion and are leading to confusion.
In reality, the situation is not as extreme as the example used above, but the gaps are pretty vast nonetheless, including a difference of 48.9% youth unemployment RATE for Spain but a RATIO of only 19%, youth unemployment rate of 49.3% in Greece but a ratio of only 13%, and for the eurozone as a whole, the youth unemployment rate is 20.8% but the youth unemployment ratio is only 8.7%.
That means a lot of young people are not in the labor force, because a vast number are in school or in training (and some of them also are “discouraged workers” who have quit looking for work, but unfortunately current methods for calculating unemployment are not very good at counting discouraged workers, whether for youth or adults).
To me, two things are clear: first, the unemployment situation among youth is certainly not good, but not as horrible as it’s being reported; and second, the methods we are using for calculating this, both for youth and adults, are largely inadequate and are leading to distorted understandings of reality.
I don’t see how these flawed methods are defensible. Certainly in trying to come up with a better methodology there are many areas of potential dispute, which boil down to (as I said in my article) what to include in the denominator and numerator. And in your post, you further elucidate some of these areas of contention. There has to be a better way to calculate and report this kind of information that doesn’t lead to so much confusion.
It seems to me that what is needed is a new way of calculating unemployment rates, both for youth and adults, that can account for “discouraged workers,” can account for situations when large numbers of a particular population are not included in the labor force (such as students), etc. Using the unemployment ratio – which calculates unemployment as a percentage of the overall population rather than as a percentage of the labor force – seems like a good place to start, and certainly a better methodology than the current one which calculates unemployment as a percentage of the labor force. Would you agree?
By reading all of your articles and posts I got convinced that both authors are extremely keen on getting the measures right, and defending a certain professional position. Which is all good and interesting, thanks for this. But can I go back to the substantial issue we are aiming to discuss? – namely, youth unemployment/employment, and not only in economic terms.
I also oppose to the instrumental use of youth unemployment measures as Hill does, but from a different perspective. Everytime I read the outline ‘rise of youth unemployment rates’ in the news I know what to expect: an article with numbers without explanations. It’s worth talking about the limitation of measures precisely to underline that those measures do not explain much about what’s happening to young people in Europe although they provide a macro picture (and not a promising one) which is worth exploring in detail. Transforming ‘youth unemployment’ in an issue of measures, rates and ratio is not clarifying much and I hope both authors would understand this critique. E.g. we can accept the criticism made by Steven that students in education should be counted in the youth unemployment rates. Even if we change the count, we won’t clarify what young people are going through or why they are now suddenly going into HE. In fact some sociologists have discussed this: ‘Lost Generation’ by Allen and Ainley (a reading that I suggest to both authors, although somehow outside your disciplinary boundaries) effectively describes how the mass expansion of HE is actually the consequence of a competitive race not to climb down the ladder (not to be unemployed!). In this sense relying on rates is not helping – and I see here that it’s not only a problem of economists… We can change the count, still we are not talking about the specific characteristics of THIS youth unemployment, which is currently explained also by the relevance of higher education since the mass expansion of the 2000s. The argument that more people into higher education is good and therefore that there is no such a big problem around youth unemployment made by Hill is also particularly misleading (and here I would say ideological, as against qualitative and quantitative provided by social research as a whole): as effectively described by Bell and Blanchflower and others youth cohorts are particularly affected by ‘underemployment’ (so employment offering lower skills compared to what they have) – therefore going into education to avoid unemployment could be also seen as a short-term solution rather than the panacea. This is no surprise: we never had a more educated workforce (than our current youth cohort) in Europe and yet very affected by youth unemployment as B&B rightly explain here http://ftp.iza.org/dp4705.pdf (a paper which is an example of non-ideological position but still very much underlining the salience of youth unemployment).
I won’t paste all the evidences showing the large diffusion of precarious jobs in south of Europe (I am sure we all know!), but I will just underline that even though this does not enter into the ‘youth unemployment’ rate it should well be a part of the discussion – as well as the number of graduates unemployed in particular in the South of the continent. To sum up: we can improve youth unemployment rates, but even when the rate will be perfect it will still stay just a rate. If we want to put forward the discussion on youth employment/unemployment we cannot only rely on rates, but we really need to start discussing the social world as a whole (including understanding the specific characteristics of youth employment and the position of young people in the labour force). Finally, as sociologists rightly suggest, transitions to the labour market are becoming fragmented, complex and uncertain so we are very likely to find less and less explanations in those rates – certainly less than we are hoping to find. Thanks,
Lorenza Antonucci, University of Bristol
Hello Lorenza, I pretty much agree with all of your post. You are right, the numbers being tossed around are obfuscating the problem, especially when those numbers are derived from such a defective methodology. In addition to the QUANTITATIVE aspect, there is a QUALITATIVE aspect to the types of jobs, the quality of employment, and more. The current way of counting unemployment is still based on an old model where most (male) employees were employed full-time in a particular job or a particular industry for most of their careers. But today’s workforce is much more diverse and filled with part-time workers, seasonal workers, temporary workers in addition to full-time workers. Current methodologies are not very good at counting underemployed people, or “discouraged workers”, for example. Truly, economists have not evolved their methodology for counting unemployment in a way that fits the current situation or the current workforce. And that’s really the crux of the problem here.
There are other biases built into unemployment methodologies. For example, institutional populations, most notably people in prison, also are not part of the “labor force” and so are not included as part of the unemployment calculation. Since the United States has the highest incarceration rate in the world—over 2 million people behind bars, 1 of every 100 adults, an astounding seven to ten times the incarceration rates in Europe—excluding prisoners from unemployment estimates artificially decreases the unemployment rate much more in the United States than elsewhere. Including prisoners would have the effect of increasing the U.S. unemployment rate by about 1.4 percent and Europe’s by only about 0.2 percent, a difference of 1.2%.
As I wrote in closing for my article on this subject, “It is nothing less than alarming that, four years after the economic collapse, we are still not much better at measuring and assessing economic health. We are like pilots flying blind without radar.”
That to me is truly worrisome. And unfortunately I don’t see many economists doing a whole lot to rectify this situation. Yes, as Andrew pointed out, some like Stiglitz and Sen have proposed some alternative measurements (I attended a small meeting with Joe Stiglitz called “Dethroning GDP” in the spring of 2010, which was exciting to participate in). But those efforts have not gained much traction, unfortunately. I hope that more economists like Andrew start prioritizing this and pushing it forward. Until then, I think it’s incumbent upon economic journalists like myself to criticize the economics profession for its glaring shortcomings.
Steven Hill
Hi Steven, thanks for your prompt reply and for clarifying your position. I summarised some of my substantial points in a blog post. I do understand and agree with your last comments, but I somehow wonder whether we tend to ask too much to economists. I do agree with the methodological argument: there are less structured methods which are probably more appropriate to describe complex phenomena (e.g. fuzzy analysis, would be interesting to use a fuzzy analysis rather than the unemployment/employment dichotomy), still not diffused among mainstream economists. But then again: aren’t we relying too much on economists? Why is it so important what economists say – while sociologists, for example, do not seem to gather the same level of attention (with the rare exceptions of Sennett, Giddens and Bauman)? After all, many methodologies to explore effectively the social world are already employed in other disciplines – sociology, social policy, etc (funnily enough the sociologists I have just mentioned offered theoretical contributions, rather than empirical ones). I am not going to develop on the reasons why empirical studies from other disciplines do not receive equal attention on the media – it might also be a lack capacity of communicating of scholars in social research. In terms of capacity to understand the reality, the major limit I see of economics as a discipline is the lack of interdisciplinarity – in this case of using evidences from social research. Compared to other disciplines there is probably a more inward-looking approach – but then again we cannot generalise for the whole discipline, many economists are involved in projects across disciplines (e.g. Kahneman and Tversky). To me the major problem remains the over-reliance on economics developed by the public opinion and the media,
Lorenza Antonucci
I’m responding here to the comments on my comment the original article, so as to try to consolidate the discussion.
I disagreed with the following statement in the original article, and this point was not dealt with:
“Perversely, the more education or training received by young people, the higher the national unemployment rate for youth.”
If every young person were in training or in education, there would be no youth unemployment. I do not follow this reasoning.
I quoted Eurostat’s definition of youth unemployment because it is well-known that many young people are studying. This is not a new or controversial point to raise.
No one is arguing that a rate of 50% youth unemployment means that one out of two young people (counting the whole population) is unemployed. If the distinction between all young people and just young people looking for work is not understood, we should try to do a better job of explaining the difference.
The exact same critique used against youth unemployment can be used on the employment rate in general. When we say 10% of adults are unemployed, we do not mean that 90% of the population is employed. It is important to clarify.
I am fine with using other indicators as Steven suggests to complement our understanding of reality, including youth unemployed/total youth population.
But here in Spain we’ve got more than 900K young people (16-24) unemployed. That more than 50% of young people looking for work cannot find jobs is a huge deal. It’s the worst figure since Franco died. Increases in tuition slated for September will make the situation worse…
I am certainly worried about the “brain drain” from Spain because most of it, like youth unemployment in general, is involuntary. Lots of young people in the periphery would prefer to stay home, even with lower wages (as has always been the case), but must leave because there are very few jobs.
David, I can’t help feeling you are missing the point somewhat. No one’s disputing that youth unemployment in Spain is dire – it’s just that it’s not in reality as high as 50% which is the figure endlessy quoted. For what it’s worth, I think Steven’s article is spot on.
Good discussion, I will try and comment more later, but for now those who are reading this debate for the first time might want to read my original article which prompted Andrew’s article, here is the URL:
http://www.social-europe.eu/2012/07/youth-unemployment-is-overstated/
Steven Hill
Stephen and all other commentators,
first of all I think it is very welcome that we are getting a good debate going on these issues on SEJ. Let me respond to what Stephen has answered in reply to my critique of his original post. There are two main and related issues. What is the right way to measure youth unemployment? And is Stephen (and are other commentators, journalists and academics who have made similar points) entitled to impugn ‘economists’ as a group/profession by writing “Economists don’t know how to measure youth joblessness” and, more broadly, suggesting that economists don’t have a [add expletive in line with your cultural background] clue.
So let’s start with the more technical issue. I (and also David Lizoan) do NOT think that THE method used to report youth unemployment is badly flawed. You just have to know what the youth unemployment rate tells you and what it does not, and where relevant use a complementary measure like the unemployment ratio. If six out of ten young people are in education, two are in work and two are looking for work, the youth unemployment rate is 50% (2/4). That is not flawed or misleading. It tells you exactly that 50% of those that are looking for work are unable to do so. That is something policymakers, journalists and academics should know.
Stephen is right that if in another county eight out of ten youngsters are in education, with one job-seeking and one working the unemployment rate is still 50%. That cannot be right he says, because the unemployment problem is, so to speak, ‘half as bad’. Well, you can see it that way, but, at the risk of seeming pedantic, the fact remains that half of those who want work don’t have it.
Everyone is perfectly entitled to also look at ratios. The unemployment ratio in the first country would be 20%, in the second 10%. That also tells us something. As Stephen himself say, Eurostat publishes the data: it is not a secret kept by obscurantist economists. Labour market experts use and discuss it, even if it plays a secondary role in the media. But all this is hard to square with a claim that economists simply do not know what they are talking about and can’t measure basic concepts. And as both David and I have said, the basic problem also applies to adults too. It’s not just an issue of those ‘withdrawing’ into education, the same consideration applies to early retirement or unpaid housework. This same ‘distortion’, in Stephen’s eyes, arises, albeit it is quantitatively less important.
I think all the commentators here agree that we also need broader indicators. My point is: they are out there, and include estimates of discouraged workers, those on involuntary part-time etc. The bottom line: yes, Stephen you have a point, but rather than come out with all guns blazing, it would have been better to sets the, say, Spanish numbers in context.
That brings me to the second point, about which I will say less. It obviously follows from the fact that I don’t think that the youth unemployment rate is flawed and misleading that I don’t think that its widespread use by economists is a solid basis on which to claim that, in a nutshell, economists are dumb. I did try and make a visible break in my post and make clear that my beef with what I see as ill-informed and undifferentiated economist bashing was NOT driven primarily by what Stephen had written. I have seen very numerous examples of such bashing in recent months and I think it is regrettable. The verve with which one attacks a given position should somehow be proportional to how well one understand that position. My feeling is that in many cases the opposite is true. The outcome is that slightly informed people say things like “I know it is incredible but economists actually believe X” and even less well informed people shake their heads or laugh and everyone feels better. But if a statement of that type sounds ‘too stupid to be true’, then the reason may well be that it is (i.e. is not true).
Just to give an example where I share Stephen’s annoyance. Today Spiegel online writes on Spanish unemployment and says that the problem is particularly acute amongst youngsters. They then say “fast jeder zweite hat keinen Job” i.e. “almost half of them are without a job”. That is clearly an incorrect statement, reflecting, I am sure, journalistic ignorance. In fact many MORE than half do not have a job, but that is because many are in education. Much LESS than half of all young people are actually unemployed. But half of all those on the labour market are unemployed or, which is the same thing, the number of youngsters with jobs is the same as that
withoutunemployed. http://www.spiegel.de/wirtschaft/soziales/spanien-arbeitslosigkeit-auf-rekordhoch-a-846701.htmlAndrew and David, perhaps here is the source of our friction. You wrote (my emphasis added):
“I (and also David Lizoan) do NOT think that THE method used to report youth unemployment is badly flawed. YOU JUST HAVE TO KNOW WHAT THE YOUTH UNEMPLOYMENT RATE TELLS YOU AND WHAT IT DOES NOT, and where relevant use a complementary measure like the unemployment ratio… THAT IS SOMETHING POLICYMAKERS, JOURNALISTS AND ACADEMICS SHOULD KNOW.
And David wrote:
No one is arguing that a rate of 50% youth unemployment means that one out of two young people (counting the whole population) is unemployed. IF THE DISTINCTION BETWEEN ALL YOUNG PEOPLE AND JUST YOUNG PEOPLE LOOKING FOR WORK IS NOT UNDERSTOOD, we should try to do a better job of explaining the difference.
My comment: No, the distinction is NOT well understood, and NO that is NOT something policymakers, journalists and academics know. And economists are doing precious little to help them to better understand it. That’s why this methodology for figuring out unemployment levels is causing so much confusion and providing a poor reflection of reality. Most people don’t read “50% youth unemployment” and automatically think, “Well, that’s just unemployment among the small number of youth who are not in school or job training, and are not able to find work.” Sorry, no, that kind of translation is certainly NOT happening.
So should you fault the public for being ignorant? Isn’t that like teachers faulting their students for not already knowing the things that the teachers are supposed to teach them?
And guess what? Nobel prize-winning economists also apparently don’t know this either. Here is a quote from Paul Krugman’s column in the New York Times on April 29, 2012 (I have a link to his column in my original article above), he begins his widely read column with this first line in the very first paragraph: “In Spain, the unemployment rate among workers under 25 is more than 50 percent. In Ireland almost a third of the young are unemployed.” When Krugman writes that “almost a third of the young” are unemployed in Ireland, he actually represents that a third of the ENTIRE POPULATION of Irish 16 to 24-year-olds is unemployed, wouldn’t you agree? So in methodological terms, Krugman actually is describing the unemployment “ratio” of Ireland – which is 11.7% – and yet citing the unemployment “rate” which is 30.5%. This from a Nobel Prize winning economist?
Should we say that Krugman simply doesn’t understand the difference between the ratio and the rate? Or, in his ideological zeal to push for more stimulus spending, is he dishonestly misrepresenting the data? Which is it Andrew, ignorance or dishonesty? From a Nobel Prize winning economist, yet.
(Yet another reason why I have never understood the infatuation among many on Social Europe Journal or the European left with Paul Krugman. Among other examples, Krugman has been wrong about Japan for years, contributing to the myth of Japan’s “lost decade” even though Japan was doing better in many ways than the US or many European states during those years. It’s all a matter of what you choose to measure, isn’t it? Myself and others like Eamonn Fingleton have pointed this out, see my article “Reconsidering Japan, Reconsidering Paul Krugman,” http://www.steven-hill.com/reconsidering-japan-reconsidering-paul-krugman/)
Here’s Joseph Stiglitz, another Nobel prize-winning economist, writing in his Project Syndicate column that was distributed around the world: “Youth unemployment in some countries is approaching or exceeding 50%.” (see http://www.project-syndicate.org/commentary/after-austerity). There is no attempt in Stiglitz’s column to contextualize this number in a way that takes account of the various definitions and conditions that we have been discussing. It simply makes it look like, of all the “youth” in some countries, around 50% are unemployed. Doesn’t it?
Really, I don’t wish to be so strident in my criticism, but your defense of your profession is irritating and misplaced. You would be better spent putting your time into educating fellow economists like Krugman and Stiglitz to get it right – and when they get it wrong to issue corrections. Rather than trying to criticize the messenger, i.e. myself, who you say you sort of — kind of — to a degree — think has a point, but who is going too far in his/my criticism of your profession and its Nobel Prize winning economists, you might try doing something to correct this methodological car wreck that your profession has created and seems to be doing nothing to untangle.
And you when you’re finished with that one, I have a bunch more you can try and untangle, a few of which I listed in the opening paragraph of my original article at http://www.social-europe.eu/2012/07/youth-unemployment-is-overstated/.
As I wrote in that opening paragraph, “One thing we have learned from the economic crisis is that we need better ways of measuring economies, at both national and global levels (Andrew – a quite reasonable statement, wouldn’t you agree?)…The performance of the economics profession has been like a master chef who not only burned the meal but burned down the entire restaurant. Yet the chef never lost his job; instead he is still in the kitchen, cooking up mostly the same meal, no wiser for the wear.”
As I am sure know, I am not the only economic analyst to criticize the economics profession. Economist Dean Baker in the United States has also been quite vocal in his criticism of your/his profession, as have a few others. I stand by that criticism, and your defensive reaction has only solidified to me how right I was, and pinpointed even more precisely one of the reasons for the economics profession’s utter failure during this most challenging time.
Yours,
Steven Hill
http://www.Steven-Hill.com
P.S. I really DO hope you contact Paul Krugman and set him right on this. I’m sure you must know him at least enough to drop him an e-mail. It really hurts our efforts to analyze conditions and recommend policy when such a high profile economist can’t get right something so basic. And it really is incredibly embarrassing for the economics profession that this Nobel Prize winner not only puts out such confused information, but apparently does it with impunity and with little criticism from fellow economists like yourself. You clearly take pride in your profession – hence your defensiveness– so then I believe it’s incumbent upon you to clean it up. I look forward to hearing what Krugman’s response is, and what his reason is for clearly using the wrong numbers. –Steven
A truly fascinating debate. Thank you Stephen and Andrew for some high quality discourse on this matter. My apologies if this question has been previously addressed, but I am curious to know if there is any way to determine a relationship between the number of young people who are seeking out job training or further education BECAUSE the job market is so bleak. Has a historical correlation ever been conducted? Intuitively, one would think that a certain percentage of younger people would be inclined to go to school if job openings and prospects were dim. Is there a metric out there which takes into account job openings, the # of youth seeking work, and the # of youth enrolling in school, and the # of youth enrolling in school primarily due to limited job options? It would seem to me that these variables, or some combination thereof, could give a more accurate picture of youth unemployment.
Hello Dave, yes, that would give a better snapshot of reallity, but unfortunatel6y I am not aware of such a metric. I guess you would have to poll students and ask them WHY they chose to go to school to really, and of course hope that they are accurately self-reporting.
Andrew, are you aware of any research about this?
Steven Hill
Or perhaps data on how people feel about the current state of the economy (broken down by age to account for young people) and correlate that with student enrollment figures? It’s not that big of a leap (IMO) to assume that the intervening variable would be negative attitudes influence behavioral decisions. Of course, the counter-intuitive outcome would be that large scale financial crises, instead of placing a generation of young people at risk for permanent dislocation, actually may help them prepare for the future and return to the work force better equipped than previously….???