Unemployment in Western countries since 2000

The most widely cited measure of unemployment is the unemployment rate. This is defined as the number of people who are not employed but are actively searching for work relative to the total labour force. The labour force, in turn, is defined as the total number of people who are either employed or unemployed. During the financial crisis that began in 2008, unemployment rates in most Western countries rose considerably. In many countries, they are still high. One major exception is Germany, where the unemployment rate today is lower than it was in 2007. The graph below plots the unemployment rate for selected Western countries between 2000 and 2011. (All data are from the World Bank.)

The unemployment rate went up everywhere except Germany. Most countries experienced a moderate increase. Greece, on the other hand, experienced a substantial increase. Although the unemployment rate rose in France and Italy, it was not unusually high in these countries by 2011.

Another measure of unemployment is the employment-to-population ratio. This is defined as the number of people who are employed relative to the total population older than 15 (or 16). Alternatively, it is sometimes defined as the number of people who are employed relative to the total population aged between 15 and 64. The graph below plots the employment-to-population ratio (defined the first way) for selected Western countries between 2000 and 2011.

Here a very different picture emerges. The employment-to-population ratio has long been much higher in the United States, the United Kingdom and Sweden than in the other European countries. This is due to a number of factors: demographic, cultural and regulatory. (Part of the difference may also be due to discrepancies in exactly how 'employment' is defined in each country.) One caveat is that many of the people not working in a country like Italy (namely women) are engaged in home production, which is an economically useful activity. Nevertheless, it is quite remarkable that in the early 2000s, for example, about 20 percentage-points more people were employed in the United States than were employed in Italy.