Unemployment is widely viewed as the gravest economic problem for most industrial countries. In Europe, it has climbed steadily for the past 25 years to reach a postwar high (Exhibit 1). In the United States, it has been cyclical, with an average below that of Europe for the past decade. Japan has so far experienced low unemployment, although the early stages of economic reform and the recent rise in the numbers of the jobless suggest there is a risk that it will grow in the future.