This PDF is a selection from an out-of-print volume from the NationalBureau of Economic Research

Volume Title: The Measurement and Behavior of Unemployment

Volume Author/Editor: Universities-National Bureau

Volume Publisher: NBER

Volume ISBN: 0-691-04144-X

Volume URL: http://www.nber.org/books/univ57-1

Publication Date: 1957

Chapter Title: International Comparison of Unemployment Rates

Chapter Author: Walter Galenson, Arnold Zellner

Chapter URL: http://www.nber.org/chapters/c2649

Chapter pages in book: (p. 439 - 584)

INTERNATIONAL COMPARISON OFUNEMPLOYMENT RATES

WALTER GALENSONUNiVERSITY OF CALIFORNIA, BERKELEY

AND

ARNOLD ZELLNERUNIVERSITY OF WASHINGTON

1. Introducticm

who has followed the recent controversy over American un-employment statistics is aware of the definitional and technical pitfallsinvolved in the preparation of a single unemployment series, to saynothing of the problems involved in comparing several series for thesame country emanating from different sources. Such difficulties arethrice compounded in international comparisons in which the data tobe compared have no common basis in economic structure and politicaland social institutions. On its face, unemployment among industrialworkers appears to be a fairly simple concept. In fact, it is a complexmulti-dimensional phenomenon, imperfectly measured even in theindustrial nations of the West. Nevertheless, interest in unemployment,both as an aspect of the comparative development of national econ-omies and as a factor powerfully influencing the role of nations in theworld economy, has stimulated efforts in the past to secure somemeasure of unemployment going beyond national boundary lines. Themost ambitious attempt was the construction of an international indexof unemployment by John Lindberg of the International LabourOffice.' Successive international conferences of labor statisticians haveagreed upon the importance of altering statistical practice to the endof facilitating international comparison, but actual progress in thisdirection has been S1OW.2 Helpful in this respect have been several

Note: The authors wish to express their appreciation to Professor Clarence D.Long and to Mrs. Ruth P. Mack for a helpful reading of the first draft of this paper.The Institute of Industrial Relations, University of California, Berkeley, providedmaterial assistance. in the preparation of the paper.

1 This index was computed by averaging percentages of unemployment for 15countries, weighted by occupied industrial population as indicated by census data.The figures are available for the years 1929 to 1938. For the details of methodand calculation, see John Lindberg, "An Attempt to Construct InternationalMeasures of Unemployment" (October 1932, p. 491), "Some Problems in theConstruction of Index Numbers of Unemployment" (April 1934, p. 472), "WorldIndex Numbers of Unemployment" (January 1939, p. 118), and "World Level ofUnemployment" (June 1939, p. 812), in the International Labour Review.

2 See The Second International Conference of Labour Statisticians, Interna-

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reports of the ILO dealing with specific problems involved in recon-ciling unemployment statistics on an international basis.3

The procedure we have adopted for the purposes of this paper is insome respects more ambitious than previous endeavors, in others muchless so. We have attempted to assemble unemployment data for someten countries, all of them relatively industrialized, for the period 1900-1950, insofar as relevant data were available. The choice of countrieswas governed (1) by the availability of unemployment statistics,(2) by the availability to us of a minimum of material describingand evaluating these statistics, and (3) by the amount of time at ourdisposal. Thus, for example, Italy was ruled out by the unsuitablecharacter of its unemployment statistics for much of the period inwhich we are interested. The United States and the Soviet Union wereexcluded on the ground that they were to be the subjects of specialpapers at the Conference.

For each of the countries with which we deal, we have endeavoredto prepare a statement setting forth the available unemployment series.The purpose was to secure some basis for judging the degree to whichavailable data express adequately the extent of unemployment, definedas indicated below. Heavy reliance has been placed in each case uponpublished evaluations of the data by government statisticians, par-liamentary commissions, and private economists and statisticians ofthe countries concerned.

From the available series, we have either selected the one whichappeared to us most appropriate for purposes of international corn-parison, or constructed a new series on the basis of existing ones.Adjustments were made wherever feasible to bring the national datainto closer conformance to one another. However, no attempt wasmade at fine adjustment to an ideal standard, a project which wouldhave required considerably greater resources than we had at ourdisposal, if indeed it were possible at all. For example, a correctionfactor was applied to the official Australian unemployment series toeliminate unemployment due to illness and causes other than lack ofwork, but no adjustment was made to reconcile the Australian defini-tion of unemployment due. to lack of work with that, say, of GreatBritain.

tional Labour Office, Studies and Reports, Series N, No. 8, 1925, pp. 48-64; TheSixth International Congress of Labour Statisticians, New Series, No. 7, 1948.

Cf. the following International Labour Office Studies and Reports: Methods ofCompiling Statistics of Unemployment, Series C, No. 7, 1922; Methods of Sta-tistics of Unemployment, Series N, No. 7, 1925; The international Standardizationof Labour Statistics, Series N, No. 25, 1943; Employment, Unemployment andLabour Force Statistics, New Series, No. 7, Part 1, 1948.

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The resultant unemployment series, expressed in percentages repre-senting the ratio of the unemployed to the number of persons subjectto the risk of unemployment, are then brought together and compared.It is at this point that the national expert is apt to throw up his handsin horror. Yet we feel that the results are not without significance. Weare not concerned with pinpointing small international differences inthe levels of unemployment at particular points of time, but ratherwith the gross behavior of the data over half a century. We are seekingto detect differences in unemployment rates, secularly and interna-tionally, which appear to be of such magnitude as to render unlikelythe legitimate ascription of cause to differences in definition and meas-urement techniques. In the final analysis, this must remain a matterfor individual judgment until a great deal more work has been doneon detailed international reconciliation of concepts. In our view, eventhe brief review that we have undertaken of the statistics of individualcountries provides the basis for the exercise of far more informedjudgment than would otherwise be

2. Definition of Unemployment

The 1925 International Conference of Labour Statisticians resolvedthat each participating country should investigate the representativequalities of its unemployment statistics in relation to the followingcriteria:

"(1) that the ideal population 'field' to which the statistics shouldrelate should be all persons whose normal means of livelihood isemployment under contract of service, as well as those persons nothitherto wage earners who seek to become SO;

"(2) that the unemployment measured should exclude that dueto sickness, invalidity, participation in trade disputes, or voluntaryabsence from work, and should be limited to unemployment due tolack of employment or to lack of work while in employment.

"(3) that the necessary and sufficing condition for being enumer-ated as unemployed is that the individual must have been not atwork for one day at least."5

The next Conference to consider the question, that of 1947, resolvedin favor of a considerably different definition. The population at risk

4We are by no means the first to engage upon such an undertaking. For previousattempts, see Paul H. Douglas and Aaron Director, The Problem of Unemploy-ment, Macmillan, 1931, Chaps. III, IV; Unemployment: An International Problem,London, Royal Institute of International Affairs, 1935, Chaps. III-V; Wiadimir S.Woytinsky, Three Sources of Unemployment, International Labour Office, Studiesand Reports, Series C, No. 20, 1935.

The Second International Conference of Labour Statisticians, 1925, p. 72.

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was broadened to ,include employers, the self-employed, and unpaidfamily workers. All persons "able to take a job if offered one, who areout of a job on a given day and have remained out of a job and seekingwork for a specified minimum period not exceeding one week" wereto be counted as Some members of the Conferencemaintained that a minimum period of one week would serve to under-state the "true" level of unemployment, but the majority was of theopinion that "the procedures currently in use, as well as the require-ment of maximum accuracy in the count of the unemployed, necessi-tated the use of a period longer than one day."7 It may be notedparenthetically that an ILO staff report submitted to the Conferencesuggested that it would be consonant with usual practice to count asunemployed all persons seeking work "on a given day who are notemployed but are able to take a job if offered one."8

Unfortunately for our purposes, such resolutions had little effectupon actual practice for the period with which we are concerned.9No two countries