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

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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.