Friday, June 03, 2011

Unemployment Underestimated Relative To 1930s

One problem when comparing unemployment, as well as price inflation, money supply growth and economic growth, between different countries and different periods, is that definitions are often different, making comparisons misleading in some cases.

I have discussed this problem regarding inflation before and here is an article arguing that the definition of unemployment was wider in the 1930s than now, meaning that either unemployment then was overestimated, or that unemployment now is underestimated depending on which definition you think is correct. Regardless of whether you think it was overestimated in the past or underestimated now (or both) however, it is clear that the unemployment situation relative to the 1930s is worse than the most commonly used numbers suggests.


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