Who's in the Labor Force: A Simple Counting Problem?
The achievement of full employment or, as it is sometimes presented, the minimization of unemployment has been a major goal of public policy since the economic cataclysm of the 1930's. This goal reflects the implicit belief among policymakers that achieving full employment is the appropriate concern of a manpower policy responsive to the needs of individuals and society. This perception, along with the labor force concepts used to measure progress toward the full-employment objective, has its origin in the surroundings of the depression era and the Keynesian revolution. The events of this period, marked by mass unemployment and related economic hardship, and their conception in economic theory continue to shape contemporary economic policies and labor force concepts. What proved to be an adequate measure for one set of perceived problems may prove to be inadequate for another, necessitating a change in concepts or methods of measurement. In particular, the relevance of depression era policies and labor force concepts to the present is a question of major importance. Current surroundings have changed, with the growth of income transfer programs and multiple earner families weakening the link between unemployment and economic hardship. As the surroundings have changed, so has economic theory. Led by the resurgence of neoclassical theory and the development of neo-Marxist theories of segmentation, the perception of unemployment and its causes has changed over time. This paper traces the evolution of economic theory and events, and their impact upon labor force concepts. The relationship of current concepts of employment and unemployment to Keynesian theory and events of the depression era is described and the implications of post-Keynesian theories for these concepts explored. The argument is advanced that current labor force concepts lag behind contemporary economic theories and events. Some directions for change are suggested.
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