Blogger and Guardian columnist Daniel Davies, a.k.a. “D-Squared,” noted how easy it would be for France to reduce its unemployment rate:
” … [R]educe the student grant, but make students eligible for unemployment benefit. On top of this, make all other state benefits for 20-24 year olds conditional on actively looking for work, in some half-defined fashion. This will immediately increase the measured labour force participation rate of French 20-24 year olds. Since the unemployment rate is defined as the unemployed population relative to
the labour force, the increase in the denominator will bring the unemployment rate down at a stroke.”
This is completely wrong, actually. You can’t add numbers to just the denominator, you’d have to do so to the numerator as well. IOW, if we assume that the current work force is 100 million with 10 million unemployed, and that the population of the work force changes from 100M to 105M (the denominator) then the population of the total unemployed changes from 10M to 15M (the numerator). The difference is between:
10/100 = 10%
and
15/105 = 14.3%
Accordingly, the unemployment rate would actually rise, not fall.
