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Unemployment and Economic Welfare


  • David Andolfatto

    (Department of Economics, Simon Fraser University)

  • Paul Gomme


Statistics that measure labor market activity, such as employment and unemployment, are often interpreted in the press and by politicians as measures of economic performance and social well-being. Discussions that focus on cross-country comparisons of unemployment, for example, seem to be based without exception on the premise that unemployment represents a social and economic ill, so that less of it is generally to be preferred. The purpose of this note is to demonstrate that some care should be exercised when constructing a map between labor market behavior and economic welfare and that, generally speaking, such interpretations are not justified in the absence of information concerning the economic circumstances that determine individual labor market choices.

Suggested Citation

  • David Andolfatto & Paul Gomme, 1999. "Unemployment and Economic Welfare," Working Papers 99002, University of Waterloo, Department of Economics, revised Jan 1999.
  • Handle: RePEc:wat:wpaper:99002

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    References listed on IDEAS

    1. Richard Rogerson, 1997. "Theory Ahead of Language in the Economics of Unemployment," Journal of Economic Perspectives, American Economic Association, vol. 11(1), pages 73-92, Winter.
    2. David Andolfattio & Paul Gomme & Paul A. Storer, 1998. "US Labour Market Policy and the Canada-US Unemployment Rate Gap," Canadian Public Policy, University of Toronto Press, vol. 24(s1), pages 210-232, February.
    3. Juster, F Thomas & Stafford, Frank P, 1991. "The Allocation of Time: Empirical Findings, Behavioral Models, and Problems of Measurement," Journal of Economic Literature, American Economic Association, vol. 29(2), pages 471-522, June.
    4. Gary Burtless, 1998. "Relative Unemployment in Canada and the United States: An Assessment," Canadian Public Policy, University of Toronto Press, vol. 24(s1), pages 254-263, February.
    5. Kenneth Burdett & Nicholas M. Kiefer & Dale T. Mortensen & George R. Neumann, 1984. "Earnings, Unemployment, and the Allocation of Time Over Time," Review of Economic Studies, Oxford University Press, vol. 51(4), pages 559-578.
    6. Andolfatto, David & Gomme, Paul, 1996. "Unemployment insurance and labor-market activity in Canada," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 44(1), pages 47-82, June.
    7. Warren W. Eason, 1957. "Labor Force Materials for the Study of Unemployment in the Soviet Union," NBER Chapters,in: The Measurement and Behavior of Unemployment, pages 389-438 National Bureau of Economic Research, Inc.
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    Cited by:

    1. Nicolas Petrosky-Nadeau, 2014. "Credit, Vacancies and Unemployment Fluctuations," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 17(2), pages 191-205, April.

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