My bet with Bryan Caplan
The stake is $US100 and the agreed criterion is that, for Bryan to win, the average Eurostat harmonised unemployment rate for the EU-15 over the period 2009-18 inclusive should exceed that for the US by at least 1.5 percentage points
The relevant figures are at Eurostat and, with December still to come in, I estimate that the EU-15 rate will be 0.3 percentage points below that for the US for 2009, so that I beat the spread by 1.8 percentage points.
My first response is that, instead of asking Bryan to raise the spread from his initial offer of 1 percentage point to 1.5, I should have asked to shorten the term of bet to 5 years, which would bring the settlement date within my normal time horizon. If Bryan is up for this change, I’m willing to offer it now.
Second, looking at the sharp decline in labor force participation in the US, any reduction in unemployment rates there is likely to be slow. I don’t have comparable EU-15 figures to hand, but claims about the dynamism and flexibility of the US labor market are looking much less plausible now than they did a few years ago, let alone in the boom times of the 1990s.
I don’t have a full explanation for the apparent failure of economic liberalism in the labor market, but increasingly entrenched inequalities in education (which exist everywhere, but are worse in the US) and the associated lack of social mobility must play a role, I think. I had a go at some of this in the ‘Trickle Down’ chapter of my book.