France Needs to Know the Employment Numbers

March 20, 2017

The French contest for Président de la République is well underway. Central to debates on the stage and in the street is employment and, more generally, what the French economic model should be. Central to all of this is a number - 10.5 percent. A number which turns out to not even be true.

 

The French imaginary about their country, their place in the world, and their future is tied up with their unemployment rate. “What is the unemployment rate in the US?” I have been asked so many times. “About 5.5 percent.” “In France it is double that.” The graph below is burned into the French political imaginary as it is into every French university student who is convinced it is impossible to find a job. And, I know a number of instances where it has been used by employers like a bully club in thinking they have quite a bit of power.

 

 

But these figures are wrong. The simple truth, that I have stressed so often on this blog, is that the unemployment rate is absolutely useless and not informative today. 

 

The technical definition of unemployment is someone without a job but looking for one. In France, where to be eligible for generous government benefits one must be looking for a job, many more report that they are looking for a job even if they gave up long ago than the US. In contrast, American unemployment insurance only lasts 6 months and there are few additional government transfers for jobseekers. Those who haven’t been employed for a long period and don’t receive any benefits that condition them to be looking for work, are more apt to say they have not been looking for work. 

 

This is not simply armchair postulating. It can be seen in the employment rate - the figure (or figures) that should be considered. Below I have broken down the employment rate (i.e. the share of the population that is actively employed) down by age cohorts.

 

The first figure shows the employment rate for 25 to 54 year olds for an assortment of countries, with the respective figure for the US and France highlighted. As you can see, the French employment rate for the main working age cohort is actually higher than the US. 

 

 

Where France does differ from the US most dramatically is in regards to youth and the old. A mere 27.9 percent of 15 to 24 year olds worked in 2016, while that figure for the US was nearly double at 49.4 percent. But this should not be read as a sign of the sky-falling, but as evidence that European youth are living in the characteristically European way. They travel and take gap years and they are incentivized to study longer than their American counterparts and, with ample funding they are able to not work throughout their studies. If the French have any interest in raising employment on this front, all they likely have to do is charge for tuition.

 

 

The last front are those between the ages of 55 and 64. In the US, like other countries with retirement ages begins at 65, most of this cohort continues to work . In France, like other countries where retirement can begin at 60, the number of people working between 55 and 64 is markedly lower. But again, this is not a marker of the French economy going down the tubes. This is an outcome of a concerted policy choice that defends early retirement. 

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