In a previous post, we mapped unemployment claims for U.S. states during the COVID-19 pandemic. Today, we compare the unemployment rates of seven high-income countries.
The graph shows monthly, seasonally adjusted unemployment rates for Japan, Germany, U.K., U.S., Canada, France, and Italy. These rates are harmonized—that is, the same definition of unemployment is used for all these countries.
U.S. unemployment spiked from 3.5% in February 2020 to 14.7% in April. (It spiked similarly in Canada, from 5.6% to 13%.) But unemployment did not rise significantly in other countries. What explains this difference?
Countries that reduced the spread of COVID-19 early on have had less severe economic contractions, which may help explain the low unemployment rates in Japan and Germany. However, this doesn’t explain the overall trend of higher unemployment in the U.S. when the U.K., France, and Italy have also been heavily impacted by the pandemic.
In Europe and Japan, the government’s approach to unemployment during COVID-19 has focused on maintaining employer-employee relationships. Significant subsidies have been provided for employers to maintain their workforces, leading to fewer applications for unemployment insurance benefits. In the U.S., policy has focused on providing unemployment benefits to workers that have already been laid off or furloughed. It remains to be seen which approach will be more effective in supporting labor markets.
How this graph was created: From FRED’s main page, browse data by “Source.” Click on “Organization for Economic Co-operation and Development” and then “Main Economic Indicators.” On the left, filter by “Unemployment,” “Harmonized,” and “Seasonally Adjusted.” Select the monthly unemployment rates for Germany, Japan, the United States, Italy, France, Canada, and the United Kingdom. Select “Add to Graph” at the top of the page. From the “Edit Graph” panel, use the “Format” tab to change colors/line markers as desired.
Suggested by Iris Arbogast and Yi Wen.