Maximizing Flexicurity: Finding the Optimal Mix of Flex and Security

Louis Uchitelle of the NY Times says there is reason to doubt the claim that labor market protections in Europe and Japan explain most of the differences in output growth and other measures of economic performance between Europe, Japan, and the U.S.:

Job Security, Too, May Have a Happy Medium, by Louis Uchitelle, NY Times: For more than a decade, many American economists have pointed to Europe and Japan as prima facie evidence that layoffs in the United States are a good thing. The economies in those countries were not nearly as robust as this country’s. And the reason? Too much job security...

American employers, in sharp contrast, have operated with much more “flexibility.” Hiring and firing at will, they shift labor from where it is not needed to where it is needed. ...

This shuffling out of one job and into another shows up in the statistics as nearly full employment. Never mind that the shuffling does not work as efficiently as the description implies or that many of the laid-off workers find themselves earning less in their next jobs, an income roller coaster that is absent in Europe and Japan. A dynamic economy leaves no alternative, or so the reasoning goes among mainstream economists.

“Trying to prevent this creative destruction from happening is a recipe for less economic growth and less productivity,” said Barry Eichengreen ... at the University of California, Berkeley.

Starting in the mid-1990s, Europe and Japan did wallow in recession or weak growth while the American economy expanded at a spectacular clip. But no longer. Growth is slowing in the United States just as it speeds up in the 25-nation European Union and in Japan. Unemployment rates in those countries are also beginning to come down...

As the gaps close, does that mean that job security, in the European and Japanese style, is the right way to go after all? The question would be easier to answer if the European Union countries and Japan had stuck to their orthodox job security. They have not. On their way to revival, they adopted some of America’s practices.

“A number of countries have found ways to make their labor markets more flexible, without sacrificing their greater commitment to a government role in equalizing incomes,” said Paul Swaim, a senior economist at the Organization for Economic Cooperation and Development in Paris.

So the old dichotomy — insecurity versus security — is gradually giving way to a new debate. “It is obviously the right mix of security and insecurity that has to be achieved,” said Richard B. Freeman ... at Harvard...

The guideposts in this search for the right mix should not be just economic growth rates and unemployment levels. These are too often affected by business cycles. Many American economists, bent on demonstrating the payoff from layoffs, paid relatively little attention to the cyclical reasons for the underperformance of Japan and Europe. “Sometimes we forget these cyclical forces,” said Sanford M. Jacoby ... at the University of California, Los Angeles. ...

Cycles count. But so do labor policies.

In some European countries, employers are using temporary and part-time workers much more than they did in the past. That gives them leeway to expand and contract their work forces without having to add full-timers who are protected against layoffs. ...Japan ... also relies for “flexibility” on part-timers and temps.

If cost-cutting is necessary in Japan, there is a pecking order, says Yoshi Tsurumi, an economist at Baruch College in Manhattan... Dividends are cut first, then salaries — starting at the top. Finally, there are layoffs — if attrition is not enough to shrink staff. “The matter of flexibility is important,” Mr. Tsurumi said, “but the Japanese notion is to retrain and transfer people within an organization.”

Elsewhere, France and Germany have eased job protection for employees of small businesses. ... And the Danish model is getting a lot of attention. Employers in Denmark are relatively free to lay off workers, but the state then steps in with benefits that replace 70 percent of the lost income for four years. Government also finances retraining and education, pressuring the unemployed to participate and then insisting that they accept reasonable job offers or risk cuts in their benefits.

The Danish government devotes 3 percent of the nation’s gross domestic product to retraining, compared with less than 1 percent in the United States. And, of course, everywhere in Europe, the state pays for health insurance and for pensions that often encourage early retirement by replacing big percentages of preretirement income.

“What the Europeans and the Japanese understand is that modern economies can sustain social protections without killing the golden goose,” said Jared Bernstein, a senior economist at the Economic Policy Institute in Washington.

That is an understanding that perhaps will take root among American economists and policy makers, deprived as they now are of their long-running contention that job security resulted in weak economic growth in Europe and Japan.

Here's a pretty lukewarm endorsement of the flexicurity model in a working paper from Jianping Zhou at the IMF. The paper makes a point similar to a point made above, that part of Denmark's success has been from reforms since the 1980s giving people an increased incentive to train for and take new jobs. In particular, eligibility for programs has been tightened while the time people are allowed to be on some programs has been shortened. Still, relative to many countries, the programs offer substantial income protection:

Danish for All? Balancing Flexibility with Security: The Flexicurity Model, by Jianping Zhou, February 2007: ...V. Concluding Remarks The Danish flexicurity model has been widely praised for its association with a low unemployment rate and a high standard of social security for the unemployed. The model combines a high degree of labor market flexibility with a high level of social protection. While most European countries are facing chronically high unemployment rates and the needed labor market reforms often face strong political opposition, the flexicurity model looks increasingly attractive to policymakers in Europe.

However, whether the Danish model should and can be adopted by other European countries to reduce unemployment is not obvious. First, Denmark has traditionally had a combination of a flexible labor market and a high level of income protection. Economic performance under this system has varied, as demonstrated by the economic crisis during the early 1980s and the remarkable labor market performance in recent years. Second, other countries have been able to reduce their high unemployment rates to low levels with rather different social models (e.g., Ireland, Sweden, and the United Kingdom). Finally, generous unemployment benefits often raise moral hazard issues that might hinder effective implementation of the Danish model. In this regard, a strict job search requirement and tight eligibility criteria for unemployment benefits are key.

The Danish model is costly. The tax burden in Denmark is heavy because of the need to finance the country’s high spending on labor market programs and unemployment benefits. As most countries that are tempted to adopt the Danish model will typically start from a high unemployment level, a move toward the Danish model will, in the short run, trigger a sharp increase in the cost of unemployment benefits and active labor market policies, thereby widening the tax wedge, with an adverse impact on labor demand and supply. This implies that the Danish model may not be suitable for countries facing high unemployment and budgetary difficulties. Using a calibrated model for France, the paper finds that implementation of the flexicurity model could be costly, and reduction in structural unemployment during the first few years might be limited.

Nonetheless, certain key aspects of the Danish model could usefully be studied and considered by other countries. Among others, they include the various relationships between the population’s willingness to accept labor market flexibility, its confidence in a well functioning social safety net, and the accompanying need to develop effective labor market policies in order to avoid high costs and perverse incentives. The Danish government’s constant awareness and analysis of the challenges facing the flexicurity model and its ability to respond to them with policy actions are noteworthy in this regard. For instance, since the economic crisis in the early 1980s, reforms have been implemented to shorten the maximum period for participation in active labor market programs and tighten the eligibility criteria for unemployment benefits.

Comments

[anne]

Among the most impressive accomplishments of economic policy was the extent to which fiscal policy was used to protect the Japanese middle class through the extended period of deflation. I have discussed this many times, but only Paul Krugman among economists seems to have understood early on. Wall Street economists were essentially asking a depression in Japan, by abandoning the middle class to allow for economic re-structuring. Students and families continually emphasized to me the absence of middle class trauma in Japan; quite the opposite really.

[anne]

Asset prices were given little attention, especially stock prices, while years were allowed for re-structuring to come with unemployment never running much above 4%. Analysts would refer to a Japanese depression, but that was nonsense; the stock market, the market of death, was and is depressed but that has been of remarkably little economic consequence.

[anne]

Then there is Europe, which I have found for years a terrific growth story complete with value on value for investors. European stock markets offered opportunities everywhere, while real estate was slectively the same. There was always an excuse however, and many analysts seem not to have been able to understand the possibilities or the blossoming.

Europe and Japan, for me, tell what can be done with labor supportive structural programs and fiscal policies.

[cm]

What does that mean "not nearly as robust"? When somebody losing their job can take a small hit in living standard (but growing with time) instead of a large hit thanks to a better safety net, that sounds very much like "robust" in my book.

[marcello]

>If cost-cutting is necessary in Japan, there is a pecking
>order, Dividends are cut first, then salaries — starting
>at the top. Finally, there are layoffs — if attrition is
>not enough to shrink staff.

fascinating. the japanese approach is almost the _exact opposite_ of the anglo-western approach. This example suggests that Japan holds the average citizen in much higher regard. This explains Anne's observation that there has been an "absence of middle class trauma in Japan". if only we would be so inclined, the coming financial apocalypse would have much less dire impact

Interesting as well that the Japanese example has not been touted, instead the Danish model, which is merely a "kindler, gentler" version of the bass ackward anglo-western model. -sigh-

[piglet]

"The Danish government devotes 3 percent of the nation’s gross domestic product to retraining, compared with less than 1 percent in the United States."

These retraining programs probably have value in that at least some of the participants might learn something useful but I bet it is also a neat way to park some of the unemployed. That's fine with me. Let's offer decent payment and education opportunities to the unemployed. It's the best we can do. And yes, we can afford it. The Danes can, at least, and let's not forget they have also the luxury of free education for all. And the world hasn't ended.

[piglet]

Does anybody know a good source for labor participation rates? I tried http://laborsta.ilo.org/, but the presentation of these statistics is cumbersome. I have the impression that comparison of unemployment rates is so meaningless. I just looked superficially at the ILO data for Germany and US and found that German participation rates are consistently higher for the age groups 30-60, both men and women. The reverse is true for the age groups under 30. I find this amazing. Shouldn't somebody be looking at where this comes from and what it means?

[cm]

marcello: Not to dispute that other social models achieve higher average or baseline degrees of individual welfare, but I suspect that every society has its own mechanisms of determining and effecting status, ranking, judgement, ostracization, stratification, etc. That somebody from one society cannot see the mechanism in another in their own framework of concepts and interpretations doesn't mean it doesn't exist.

I have lived in Germany, and I can assure you that unemployed, marginally-attached, welfare "losers", or low-rung, low-income "commodity" workers are not generally despised less than in the US, even though in the aggregate they most likely enjoy, and are accorded, a superior standard of living, e.g. in terms of healthcare coverage.

I don't know much about Japan, but just that one is not materially destitute doesn't mean one doesn't suffer from stigma. Likewise, willingness to extend alimony, or having alimony extracted from oneself, does not imply that one likes the recipient of the alimony better. Sorry if this sounds brutal, but one has to be realistic here.

[cm]

Clarification, I didn't mean to imply that I am despising the less fortunate. But many appear to define their self-esteem by their perceived relative social status, as defined by who is "above" and "below" you, both in the abstract and the concrete.

[anne]

Piglet:

"I just looked superficially at the ILO data for Germany and US and found that German participation rates are consistently higher for the age groups 30-60, both men and women."

An especially important point; my sense is that for all the stereotypical complaining about high unemployment in France and Germany or weatern Europe, the labor force participation rates are at least comparable to those in America for older workers. Brad DeLong wrote on this, and I will look.

[anne]

http://www.nytimes.com/2006/09/30/business/30chart.html?ex=1317268800&en=ad5705f838858638&ei=5090&partner=rssuserland&emc=rss

September 30, 2006

A Statistic That Shortens the Distance to Europe
By FLOYD NORRIS

Europe has high unemployment, brought on by tight labor laws that make it hard to fire workers and therefore discourage hiring them. The United States, on the other hand, has low unemployment thanks to its vigorous and flexible economy.

That has long been the consensus view, and it is supported by official unemployment rates, which are much lower in the United States. But there is another rate that can be considered — the employment rate — and that shows that the differences are narrowing, if not vanishing, for those in the prime working ages. The employment of women in Europe has been rising at an especially rapid pace.

The employment rate simply shows the percentage of a given population with jobs. Unlike the unemployment rate, which ignores those who are not seeking jobs, the employment rate is not affected by the reason people are not working.

A decade ago, in 1995, the employment rate in the United States for men aged 25 to 54 was 87.6 percent. In Europe, including the 15 countries that were then members of the European Union, the rate was 85.3 percent, a difference of 2.3 percentage points. By 2005, the United States figure had slipped and the Europe figure was up, leaving a difference of just 0.3 percentage point.

Statistics released by the Organization for Economic Cooperation and Development, as compiled by the Center for Economic and Policy Research, show that in that age bracket European employment was higher than that of the United States in 2002 and 2003, when the American economic recovery was producing fewer jobs than it has since. The return to a higher employment rate in the United States probably does reflect the faster-growing American economy.

Among women, the percentage of workers in that age group slipped over the decade in the United States, to 72 percent from 72.2 percent, while in Europe it rose to 69.8 percent from 61.1 percent. That cut the gap from 11.1 percentage points to just 2.2 percentage points.

The accompanying charts show the differences between six major European countries and the United States. A decade ago, all of the European countries had fewer men and women working than did the United States. Now both men and women in Britain are more likely than those in the United States to have jobs, and while French men remain a little less likely to be employed, French women are more likely to have jobs.

Some of the most impressive changes have come in the countries that traditionally were least likely to provide jobs for women. In 1995, three out of five Spanish women aged 25 to 54 were not employed. By 2005, the proportions had reversed. Italy also experienced a surge in female employment....

[anne]

There is every reason to believe that western European countries have highly effective employment policies, with labor force participation rates at least comparable to America for older workers while for the yourger there is free or near free college-university education and health care.

Often we meet young European university graduates who will join residence-research programs here, gaining additional education-training, while waiting for regular positions in Italy or France or Germany. Once employed in Europe however they will stay employed.

[anne]

Remember, every reason is given why Europe and Japan do not offer important fiscal policy of labor protection models, but I am convinced of just the opposite:

union support,
minimum wage,
health care,
low cost public college-university education,
infrastructure development, soft and hard projects and green,

will change labor prospects markedly in America while enhancing our international competitiveness.

[anne]

We are spending an insane, tragic beyond tragic, $14 billion a month directly on the occupation of Iraq. Imagine leaving Iraq immediately and using the funding to support American workers. The funding is there, but, heck, for all the atruggles of Democrats the national minimum wage is still $5.15 an hour, union support is all but forgotten, let alone federal-state revenue sharing programs supporting workers from school to employment.

[Susan Clowes]

- Often we meet young European university graduates who will join residence-research programs here, gaining additional education-training, while waiting for regular positions in Italy or France or Germany. -

Where is here? Is this only common at your university? No idea what residence-research programs are available in your program but would love to learn more. Have a university program link? Would love to encourage this.

Thanks,
Sue

[ken melvin]

To my eye, Europe simply doesn't have the poverty we do (http://www.gainesville.com/apps/pbcs.dll/article?AID=/20070225/WIRE/70224067/-1/news) .Fully a third of US citizens may live in poverty, and there's the 47 million w/o health care.

Plus, the official US unemployment figure is a farce, e.g., the rate can go down and down without any real change. The US E/P contains at least 10 million illegals/undocumenteds which means the real E/P is less than 60% and unemployment is at least 12%. Our real unemployment rate is most likely 15%, maybe 20%.

Yet, blaming the victims remains a most popular solution

[anne]

Susan Clowes:

Nice questions. There are research-practice residence programs all through Cambridge, where universities are concentrated, but similarly in smaller community settings as Providence or New Haven. A range that comes immediately to mind, and I will think further, are hospital-university research-practice residence programs; tutorships involving dorm residence ranging from history or economics to Spanish or Japanese to psychology or philosophy to technology labs; young artist in residence programs; professional studies residence, especially foreign studies comes to mind....

[mrrunangun]

Ken M;
To my eye, Europe simply doesn't have the poverty we do (http://www.gainesville.com/apps/pbcs.dll/article?AID=/20070225/WIRE/70224067/-1/news) .Fully a third of US citizens may live in poverty, and there's the 47 million w/o health care.

Poverty is a relative term. The American 85th income percentile is roughly the equivalent of the Swedish 50th percentile. The American at the 85th percentile would be considered poor, the the Swede at the 50th would not. This may be a function of greater income equality in Sweden and the 25% less GDP/capita there.

[ken melvin]

Mr. Run and shoot:

'The American 85th income percentile is roughly the equivalent of the Swedish 50th percentile. '

Nice numbers. Where you get them? I just made mine up. "Tis relevant, as they say, to how much you make and what food, housing, clothing, medical etc. cost.

[mrrunangun]

Dear Ken,
The 85/50 came from a critique of the Swedish economy from a Swede published, as I recall, in Brussels Journal last year. He didn't give a primary source as best I can recall. The difference in GDP per capita came from the CIA world factbook which puts Swedish GDP/head at $31,600 and the US figure at $43,500 both for 2006. The evidence for income inequality from Nationmaster which, though dated, has probably only grown over time given US trends over the past ten years.

[anne]

Mr. R&G and Ken, please develop your thinking here a little, I am not sure I understand your interesting exchange.

[mrrunangun]

Just for comparison, here is wikipedia's of States per capita GDP from 2004&5. Sweden would rank in the high 40s even with its 2006 number.

List of States by Gross State Product per capita
Rank
(2005) Rank
(2004) State 2005 GSP
per capita
(USD) 2004 GSP
per capita
(USD)
1 1 District of Columbia 148,641 139,849
2 2 Delaware 66,961 63,004
3 3 Alaska 59,238 54,713
4 4 Connecticut 55,193 52,149
5 6 Wyoming 53,543 47,623
6 5 Massachusetts 50,935 48,803
7 8 New York 49,748 47,031
8 7 New Jersey 49,447 47,242
9 11 Virginia 46,502 43,713
10 10 Colorado 46,416 43,764
11 12 Nevada 46,108 42,498
12 9 Minnesota 45,697 44,073
13 13 California (econ.) 44,894 42,386
14 15 Maryland 43,967 41,483
15 14 Illinois 43,878 41,987
16 17 Texas 43,283 40,193
17 16 Washington 42,512 40,774
18 19 Hawaii 42,361 39,804
19 18 New Hampshire 42,033 40,090
20 21 Rhode Island 40,687 38,747
21 20 Nebraska 40,185 38,902
22 23 Georgia 40,103 38,094
23 24 North Carolina 39,921 37,933
24 22 South Dakota 39,848 38,539
25 26 Oregon 39,625 37,483
26 27 Pennsylvania 39,344 37,416
27 25 Wisconsin 39,074 37,746
28 33 Kansas 38,465 36,188
29 29 Ohio 38,461 37,133
30 31 Tennessee 38,440 36,782
31 35 North Dakota 38,319 35,662
32 28 Iowa 38,280 37,323
33 30 Indiana 38,037 36,850
34 38 Florida 37,846 35,051
35 34 Missouri 37,251 35,740
36 36 Louisiana 37,183 35,544
37 32 Michigan 37,175 36,282
38 37 Vermont 37,020 35,401
39 39 Utah 36,758 34,100
40 40 Arizona 36,457 33,841
41 41 New Mexico 35,714 33,444
42 44 Oklahoma 34,243 31,740
43 42 Maine 34,030 32,896
44 43 Kentucky 33,666 32,112
45 46 Alabama 33,264 31,239
46 47 Idaho 33,020 31,186
47 45 South Carolina 32,906 31,323
48 49 Montana 31,940 29,758
49 48 Arkansas 31,215 30,077
50 50 West Virginia 29,199 27,532
51 51 Mississippi 27,829 26,582

[edit] Sources

[edit] 2005
BEA statistics for 2005 gross state product - October 26, 2006
U.S. Census Bureau July 1, 2005 population estimates by state - December 22, 2005

[edit] 2004

[info]

That Swede?

I have forgotten his name, but there is a Think tank in Sweden which is a ideological twin of AEI and Heritage foundation.
You can recognize the think tank easily, if I remeber well they hosted the last publication of the Economic Freedom Index.

I know, it is an ad hominem attack. BUt that was just in case you thought that the fact that he was Swede was a guarantee of fair and balanced datas on the european system. That guy loathes the swedish social-deocratic system.

[mrrunangun]

Dear Anne,

Our exchange, as I see it, relates to the invidious comparisons made between the US and Sweden in particular and the EU in general in many of the threads here. Ken remarked that he did not see in the EU the poverty we have here. I am trying to make the point that poverty here is relative to its surroundings. In the EU most are poor relative to the US average in terms of purchasing power parity. Income equality is relative too. Even in egalitarian Sweden, the top 10% of incomes received 20% of the total back in the late 90s.

[John]

The proper comparison would seem to be hourly income rather than per capita income, which is of course already stacked in favour of the US social model;
as far as I am aware, using hourly figures goes some way toward shrinking the gap.

[anne]

Mr. R&G,

Thank you, because you are thinking in quite a different and cleverer way than I have noticed on the part of others who compare income levels of Swedes and Americans. The comparison must be contextualized, which should be obvious but has not been so. I certainly did not have the sense of "privation" in any way in Sweden, nor have friends had such a sense. I am thinking this through.

Ken appears to be arguing in just the same line and may not have realised that....

[anne]

Mr. R&G, I agree completely but you have given me a different idea to play with on income comparisons. Also, I want to understand a little where in particular the contemporary social sense of the Nordics come from. Sweden, like Japan, has had among the most successful of all democratic political parties since 1945, with rare losses reflecting remarkable consensus.

[John]

Another issue popping to my mind as I read this thread:
how is public-and in particular military- expenditure factored into these income figures?

It seems to me that Europeans get rather more real return for their taxes in terms of social services, etc, whereas for the US one can, coming from a social democratic European standpoint, argue that taxpayers seem to spend a lot of money on high tech military junk quite useless to most people.

Now as I am no economist I have no idea as to how big the impact of the differing nature of public expenditure on income differentials may be, but it seems noteworthy that this is an issue never touched in the attacks of right wing economists and journalists on the European social model; yet coming from a purely free marked perspective (as opposed to the generic right wing views espoused by 'neoconservatives'), it is not clear why right wing insistence on excessive spending on high tech military junk should be any less worthy of condemnation than excessive social spending; curiously (or not so curiously), this is an issue literally absent from standard discussion on the matter.

[anne]

John:

"Another issue popping to my mind as I read this thread:
how is public-and in particular military- expenditure factored into these income figures?"

Agreed, agreed, agreed.

Also, Paul Krugman tells us that you are right in using hourly income as a comparison of well being in Europe and America; I would suggest Japan as well.

[ken melvin]

First we must see how income is distributed, if the wealthy Swedes only get 20% they are mere pikers, then we'll know how many and how poor, den if we look at the cost of things like food, housing, medical, ... where they live and den add up all those who don't have enough income ...

[ken melvin]

Remember the L Curve?

[piglet]

Remember that GDP per capita figures have nothing to do with actual income. What we should be comparing is the median income actually earned, adjusted for PPP. All things being equal, the median income will be higher the more egalitarian a society is. As to the 25% difference in GDP per capita you cited, I don't give much credence to that statistic unless someboy can point out to me in what sense average Americans enjoy a higher living standard than Swedes and other Europeans. I haven't seen any evidence for that. I haven't seen anybody trying to measure the living standard rather than raw GDP and coming up with superior results for the US.

E.g. there is the "World-wide quality of living survey" by the consulting firm Mercer. The highest ranking cities in the 2006 survey are Zurich, Geneva, Vancouver and Vienna, and Continental European, Canadian and Australian cities dominate the top of the list. The best US cities to live at, Honolulu and San Francisco, are ranked 27 and 28, Boston follows on rank 36. This survey is not flawless and it doesn't attempt to compare countries but it gives a hint. It appears that there is a disconnect between American GDP and Americans' quality of life.

[ken melvin]

"It appears that there is a disconnect between American GDP and Americans' quality of life." AKA inequity of wealth and income distribution.

[mrrunangun]

I mention the GDP/capita because the figures are readily available and a fair comparison, whereas comparable average hourly rates of pay are not readily available. The American pie is divided more unequally than in the EU countries, but it is a much bigger pie and so the 85/50 figure is at least plausible.

Quality of life measures in the US are hampered in comparison to EU cities by our much higher rates of serious crime. The Mercer piece mentions that crime rates, pollution, and traffic congestion are the items that differentiate cities in the developed world. They don't say anything about income inequality or flexibility in the job market.

As for wasting money on weaponry, the EU nations were given a pass on that by our proclaiming to be willing to bear and burden, pay any price, etc. Perhaps we have finally seen the error in that approach and when we have withdrawn our costly troops and equipment from the EU they would have to pay for their own defense or go without.

[spencer]

One of the ways to adjust the per capita gdp data is to look at the share of gdp going to the bottom quintile of the income distribution. The CIA generally includes this data in its country fact sheets. But, as a rough rule of thumb in Europe the share of gdp or income going to the bottom quintile is roughly double that in the US.

So maybe a European country will rank in the lower half of the income distribution by state in the US but that does not mean the Europeans at the bottom are as poor as the Americans at the bottom.

In general, a poor European will be better off then a poor person from Mississippi.

[piglet]

"The American pie is divided more unequally than in the EU countries, but it is a much bigger pie and so the 85/50 figure is at least plausible."

I don't have time to look up the figures now but if we take the 25% GDP advantage you cited at face value, which I wouldn't do, then the 85/50 figure is still highly implausibile. If indeed Sweden is more egalitarian, then the difference in median income should be less than 25%. You don't believe that the income of the poor in America is about 80% of a middle class income, do you?

As I said, the Mercer ranking gives a hint. If indeed America is so much richer then we would expect Americans to enjoy a higher quality of life. But it is difficult to find evidence for that.

[Isabel]

Timbro is the name of the thinktank

http://www.timbro.se/EnglishDefault.aspx

"That guy loathes the swedish social-deocratic system."

Yep.

[anne]

Ah, now I understand, this is the old "rich Europeans, especially Swedes are really poor as chruch mice because of socialism" argument. I thought so. Nice stock market all these years though.

[Isabel]

Swedes have some fascinating statistics:

http://www.scb.se/templates/tableOrChart____159838.asp

[anne]

Thank you, Isabel, I never would have guessed at the extent of births in Sweden of immigrants though I remembered that you alluded to this earlier. Strikingly diverse.

[Isabel]

Er...I think this table is about the median income of various groups of people, born in Sweden or abroad, and its evolution in time. I don't think you can tell how many people in each group, can you?

[anne]

No; I was referring to your previous comment which I followed on. Here what I am impressed by is the evident income integration over time.

[kevin quinn]

I am constantly amazed at how many economists forget that "security" is part of well-being, that our maximand should be (at-least) certainty-equivalent income, not income per se.