Rates of Unemployment in Great Britain and the United States, 1950-1960

Abstract

N the postwar period, both Great Britain and the United States have been committed to a policy of maintaining full and expanding levels of employment. Despite this similarity in policy objective, official unemployment estimates have been significantly lower in Great Britain than in the United States. Furthermore, the intercountry spread in unemployment rates has widened substantially since the end of the Korean War. This widening has been due to an uptrend in the American unemployment rate, which has averaged higher in each succeeding postwar cycle. There has been considerable controversy over whether this spread in unemployment rates was a measure of the relative success of full employment policies in the two countries or whether it merely reflected differences in statistical concepts and in the structure of economic activity. Official British sources attribute lower British unemployment rates almost entirely to the maintenance of a higher level of aggregate demand relative to resource availability in Britain. On the other hand, some private writers have maintained that the difference would be largely or totally eliminated if both countries defined and measured unemployment in the same way.' The purpose of this paper is the evaluation of those factors which may have a differential impact on British and American unemployment rates. First, differences in the concept and measurement of unemployment are analyzed to determine whether they result in any significant bias in the published unemployment rates. The influence of labor market attitudes and behavior on the level of frictional unemployment in the two countries is then examined. Finally, evidence that the British have managed to maintain relatively fuller employment conditions is presented.