In response to a recent paper that was somewhat bullish about the benefits of the European employment model, Bryan Caplan proposes the following bet. It has since been taken up by John Quiggin.
“I’m going to offer the following bet to the authors of the CEPR report:
The average European unemployment rate for 2009-2018 (i.e., the next decade) will be at least 1% higher than U.S. unemployment rate. The bet will be resolved when Eurostat releases its final numbers for 2018.
I’m happy to bet each of the three authors $100 at even odds. Will they accept?
P.S. By 1% I of course meant 1 percentage-point.”
3 replies on “Bryan Caplan’s Unemployment Wager”
Appears to be an emphasis on measurement, particularly on whether prisoners count as unemployed. Who will be crying foul when the time comes to pay up?
Prisoners, yes but the main categories that cause problems in international comparisons measurement are people with disabilities, carers, early retired and so on. I haven’t ran the figures yet but, for example, if you look at Holland as opposed to the US, there is a far higher number of people out of the workforce with disability despite the fact that the Dutch population is a lot healthier than the US population. Even taking all this into account, Caplan believes that the freer labour market in the US will bounce back a lot quicker than Continental European labour markets and have lower rates of unemployment not just higher rates of employment. By extension, Ireland will also bounce back a lot quicker?!
I think Bryan Caplan will collect.
However, the US unemployment rate is likely to be higher over the next 10 years than it was over the past 10.
Not only is the US labor market more flexible, but the government subsidies for the unemployed are less generous.