How tight is the labor market?

Summary:
Inflation is coming down, as the last BLS report shows. I'm not going to get into that into this (very short) post. The disinflation has taken place while the official unemployment remains very low. However, we all know that unemployment measures very poorly the situation in the labor market. My alternative measure, which I make students calculate in macro classes, is what would be the unemployment rate be if the participation rate, which has been declining since the early 2000s (when China entered the WTO; see on that and deindustrialization this very old post), was the same of the last peak (back at the end of the Clinton era) when it was at about 67 percent (see below).Note that the unemployment rate has a negative relationship with the participation rate, everything else constant. The

Topics:
Matias Vernengo considers the following as important: China, disguised unemployment, Disinflation, Unemployment

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