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Home Publications Blogs Beat the Press Does France or the U.S. Have a More Severe Problem of Youth Unemployment?

Does France or the U.S. Have a More Severe Problem of Youth Unemployment?

Saturday, 06 July 2013 07:51

Of course all well-educated NYT reading types know the answer to that question is France. After all, the NYT ran an oped just last week telling young French people that they better get out of the country. (Actually, the idea of spending time in other countries is probably good advice for young people everywhere, if they can afford to do it.)

But in fact those who knowingly huff about the high youth unemployment rate in France are primarily displaying their ignorance. France does have a substantially higher youth unemployment rate than the United States, but this is almost entirely due to the fact that a smaller share of French young people work. France has generous support for higher education so most college students do not work. By contrast nearly all college students in the United States work.

If we just look at the percentage of young people who are unemployed it is almost identical in the two countries. According to the OECD, the unemployment rate for people between the ages of 15-24 in France was 23.8 percent in 2012. With a labor force participation rate of 37.8 percent, this means that 9.0 percent of this age group was unemployed last year.

The unemployment rate for this age group in the United States was 16.2 percent. But the labor force participation rate for people between the ages of 15-24 in the United States was 54.9 percent. This means that 8.9 percent of the people in this age group were unemployed in the United States.

Before anyone breaks out the champagne to celebrate our narrow victory over the French, there is one other item to consider. In France, their survey coverage is almost complete. People are used to dealing with the government and are comfortable answering surveys. That is not the case in the United States. The coverage rate (the percentage of targeted households who respond) for the Current Population Survey (CPS) is just 88 percent. (The CPS is the survey used in the United States for measuring unemployment.)

It is considerably lower for people who are likely to be unemployed. For example it is less than 70 percent for young African American men. This means that the U.S. data almost certainly understate our true unemployment rate, if we assume that the people who don't respond to the survey are more likely to be unemployed than the people who do. This fact will be more widely recognized as soon as an important economist decides to pay attention to it.

Anyhow, the long and short is that it is almost certainly the case that a higher percentage of young people are unemployed in the United States than in France. Tell that one to your croissant munching, NYT reading friends.

Comments (8)Add Comment
written by Last Mover, July 06, 2013 9:09
That is not the case in the United States. The coverage rate (the percentage of targeted households who respond) for the Current Population Survey (CPS) is just 88 percent.

Just wait till the NSA hears about this. Anything less than 100% is unacceptable for national security issues associated with youth unemployment. It will have to be classified and collected with the usual top secret carpet bombing methods before it's comparable to France.
written by Chris Engel, July 06, 2013 7:47
I've had my suspicions about the accuracy of the youth unemployment numbers in the US. And not in the Jack Welch "The BLS is cookin' the books!" sense, but in the cultural sense that permeates the rural-urban divide where Americans don't trust the government's surveys and such.

Youth unemployment in other parts of Europe is undoubtedly worse than the US (Spain, Greece stick out) -- but the reality is that all of us in the West have a crisis of a lost decade on our hands. It's Japan all over again and the worst part of it is that so many people knew that this a replay, but the elites in charge ignored them and worried about all the wrong things (hurting business' feelings with proper taxation, inflation, etc.).

Inequality continues to grow, consumers/workers continue to lose out to big business bourgoeis, and everyone keeps wondering how much longer it can go on. If the Gilded Age is any lesson, we know it can last decades before true change is forced upon the elites.
French universities
written by Dave, July 07, 2013 3:42
I did my senior year in France at the University of Grenoble, and as a graduate student I taught English at the University of Bordeaux.

It's true that university education is much cheaper in France (my experience is from the early/mid 90s). The facilities are not as nice: they didn't have much internet in 94, and the libraries were a joke compared to my home school of UCLA. Even compared to my high school. You wanted books, you had to buy them. But the local bookstores were well stocked.

The buildings were kind of Stalinist grey. The schools usually are not in the cities but in a suburb and you take a tram or bus to get to them (transport is convenient).

Back in the 90s all the students smoked in the halls. The profs were gruff but very good - France has an authoritarian educational culture generally, but some profs are nice.

The thing about the tuition being cheap is, some students stay in school for many years. As a student, you get discount prices on tons of things. For instance, I went to Grenoble b/c it's in the Alps and I love skiing. You get a super discount on ski tickets - and my friends and I bought a cheap car and went skiing every weekend. You also - with your student card - get discounts on movies and the like.

I think the French get univ. right: have crappy buildings and good professors and cheap tuition. They do need to improve their libraries, though I guess if you were in Paris you could use the national library.
I don't understand this article's data
written by Melissa, July 07, 2013 6:10
"According to the OECD, the unemployment rate for people between the ages of 15-24 in France was 23.8 percent in 2012. With a labor force participation rate of 37.8 percent, this means that 9.0 percent of this age group was unemployed last year." Huh? If the unemployment rate was 23%, then it's 23% - how are you getting 9%? If you subtract 23.8 from 37.8, you might be able to say that only 14% are employed, but that's only if their unemployment rate only counts people actively seeking work. I can usually follow your numbers, but this one has me stumped.
Took me a moment, too.
written by Herringbone, July 07, 2013 8:09
But I think the issue is that to be "unemployed" one has to be actually interested in working. So If 40% of a population is interested in working, and only 25% of those interested are unable to find work, then the real unemployment rate of the population as a whole is 10% (25% of 40% in my example; according to the real figures for French youth, it's 23.8% of 37.8%, or ~9%).

Prof. Baker is suggesting that the low percentage of "interested" youth stems from France's support for higher education, but I have to say that does seem to me to beg the question of whether there aren't a significant number of youth who have just stopped being "interested" because they know they won't find work.

And it's possible I have it all wrong, in which case Prof. Baker needs to know that at least two regular readers are confused on this point.
Unemployment rate means the percent of people in the labor force who are unemployed
written by Dean, July 07, 2013 8:18
That is the reason for my multiplication -- to get the percent of the total population who are unemployed.
Herringbone correctly raises the point that in France, as in the United States, there may be many people in this age group who would like to work but have simply given up looking and therefore are not counted as unemployed.

This is a real issue. I have no idea whether more French or U.S. young people fall into this category. However, I do feel comfortable saying that the main reason for the difference in employment rates is the difference in the cost of higher education.
Black Economy
written by Gaston, July 07, 2013 1:40
I lived in the South of France for years.

Many, many people of all ages worked off the books, mainly to evade taxes.

While there, I read one report that the French government thinks half the labor done in the rural areas are not reported.

I had four contractors provide estimates about an addition to my house.

Only one refused to underreport the actual invoice, and accept partial payment off the books.

Maybe the French are comfortable responding to government surveys, but I can say for certain that they hide whatever income they can from that same government.

include the undocumented please!
written by pete, July 07, 2013 9:36
of the 11M or so undocumented, or even legal, we have a huge black market in labor which is completely missed. this might be easier in the U.S. for landscaping, construction, nannying, maid service, etc. I suspect that in the U.S. actual unemployment including the black market as a fraction of actual labor force including black market is much smaller than reported by using official stats.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.