Nathan Lambert has posted a provocative Fabian essay on The New Leisure Crisis, in which he argues that:
The idea that these people should ‘contribute to their communities’ is ignorant and Rousseauian. Whatever jobs they might have done are gone. No amount of policy reform â€“ short of reversing the Industrial Revolution â€“ is going to bring them back again.
The solution to mass underemployment, first and foremost, is to recognise there is no solution to mass underemployment.
I’m not as pessimistic about Nathan about the prospects of increasing participation rates. For example, if you’re worried that some individuals have lower marginal product than employers are willing to pay for, then US/UK style wage subsidies (aka EITCs) might be part of the solution. And with rising educational attainment, we might be able to avoid the problem of having a substantial segment of the population for whom job retraining is largely ineffective.
But I did particularly like the way that he’s graphically presented the trends in male and female labour force participation over the past 40 years. It’s a topic that my colleague Bob Gregory has been talking about a lot lately, but I like Nathan’s graph even more than the ones Bob shows, since it allows you to see what’s going on with men and women, part-time work and full-time work, employment and unemployment.