Disguised unemployment in the G7 countries

This paper observes economic situations related to unemployment and estimates the levels of disguised unemployment in the major industrial countries: Canada, France, Germany, Italy, Japan, United Kingdom, and United States, using data published in the OECD National Accounts of OECD Countries. Disguised unemployment is employment with much lower productivity than the appropriate level. It is a kind of unemployment wherein the labour force is not being put to sufficient use. The objectives of this research are to show whether there is a difference or no difference in the scale of disguised unemployment between those countries and also whether there is a difference or not between employment features in recent years and in previous findings. For each country, the level of disguised unemployment is calculated as follows: first, the magnitude of disguised employment in each industry in the country is estimated from its productivity level, and then, the estimates are added together.

The previous study finds that the countries of Western Europe, especially France and Germany, had high rates of unemployment and low levels of disguised unemployment relative to those of North America in the 1980s when the major industrial economies commonly experienced the rise in unemployment. This paper examines observations in the 1990s and the 2000s to compare to this fact to the 1980s. One observation is that generosity of unemployment insurance, which is considered a key factor affecting the level of disguised unemployment, tends to decrease in Germany and increase in Italy. As a result of the estimation, it will be shown that the situation in the 1980s has changed particularly in Germany and Italy.