Americans keep touting our unemployment rate and our inflation rate but the truth is they are both BOGUS.

http://www.tampabay.com/news/article473596.ece

I believe Mr Baker actually wrote a book about changes made to the way we measure inflation, Getting Prices Right: The Battle Over the Consumer Price Index (M.E. Sharpe, 1997)

Hey, I'm all in favor of a free labor market. For starters, here are a couple of restrictions on labor market flexibility we could remove:

1) Taft-Hartley, which is a restraint on free association; and

2) Right-to-work laws, which impair the right of private contract.

Denmark? Strong labour market protections? Are you sure you've got the right country there?

It depends a little on what you mean I suppose. A Danish worker has almost no rights against being fired at will. In this sense quite similar to the US. However, unemployment pay is a very high percentage of previous wages (80-90% level as I recall) and retraining opportunities abound.

As I say, depends what you mean: "labour market protections" usually mean, at least to me, limits upon employers as to firing people, which simply isn't true of the Danish case (and to a lesser degree, the Swedish).

Tim,

you're right about Denmark, it is relatively easy to fire workers there. I was referring to employment protection more generally across the OECD. Our research found no link between the strength of employment protection legislation (EPL) and unemployment (or employment) rates.

The OECD's subsequent research on the topic found the same thing, although they did find that stronger EPL did lower employment rates among young people.

Dean,

It's not scientific, but French young people I have spoken to talk about how hard it is to find permanent employment. Their employers are risk-averse and do not want to risk hiring a bad worker and not be able to fire them, so they rotate entry-level workers through temp positions that have to end, otherwise the worker becomes permanent. I can't tell whether this is "just a feeling" they have, or whether it's a big problem.

it seems more helpful to talk about the type of labor market regulation. the French make it difficult to fire, while, as I recall, the Swedish and Danish regulate wage and working conditions but allow employers to fire easily. (and cushion the blow with high unemployment compensation.) It seems like the French version doesn't work as well as the Danish/Swedish model.

oh yeah, when I think of efficient labor markets, Europe immediately comes to mind.

But this is the United States, where PROFIT is thy god, and the one true religion. Forget not that PROFIT is a jealous god, for if you come by that which is good, yet it comes not by the path of PROFIT, then it is an abomination in the eyes of the WSJ. Go forth and sin no more with this wild and irresponsible talk of 'what the research shows'.

You could have low unemployment in those countries if you put the unemployed in "labor market political activities":

As for unemployment, the seemingly low numbers in Denmark reflect in fact the same kind of manipulation of statistics that the Swedish government have been using. While official unemployment in Denmark was only 133,500 or 4.8% in March 2006, there were in the fourth quarter (latest available number in Denmark's statistical data bank )some 117,600 people or 4.2% in so-called "arbejdsmarkedspolitiske foranstaltninger(="labor market political activities", what in Sweden is refered to as "AMS-åtgärder")". This means that Denmark have even more hidden unemployment in that respect than even Sweden, where "only" 3.2% (144,000) were put away in "labor market political activities" .

http://stefanmikarlsson.blogspot.com/2006/05/denmarks-overrated-flexicurity.html

But the "labor market political activities" doesn't sound as bad as being unemployed in the United States.

I attended a seminar last week by a leading Democrat in Arizona about the importance of education. His group we proposing dedicated (tax) funding for education. In his argument he touted the income disparities between the educated and non-educated and then extrapolated to the general economy. Although I do not oppose increased funding for education (although I do oppose dedicated funding)I was struck that increased income (and the same general improved economy) could also be accomplished by eliminating barriers to union organizing, starting with Arizona's "Right to Work" law.

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