Why is Swiss unemployment so low?

Why does Switzerland have a low unemployment rate?

…is a question from Really Curious.  Here are some data, but right now it is at 3.1%.  I see a few factors:

1. The Swiss have few ZMPers, so their natural rate is fairly low to begin with.

2. The Swiss do not have the same kind of welfare state and labor legislation that you find say in France, which also lowers their natural rate, and which makes adjustment to negative shocks easier.  Unemployment benefits are not so generous and they pretty much force you to try to find work again.

3. In the past the Swiss have managed their immigration policy in accord with the domestic unemployment rate.  For instance if unemployment was rising they would send some Italian guest workers back home.  Immigration into Switzerland is now so substantial, however, and integrated into so many sectors, that this procedure has lost its potency.

4. Swiss jobs are relatively permanent, compared to the United States.  You will note that #4 interacts with #3; immigration is by no means always or even usually zero-sum with respect to the jobs in a country, but it can be for some well-defined pockets of manufacturing jobs in Switzerland.

5. The Swiss central bank does not hesitate to engage in sophisticated schemes of quantitative easing when an appreciating exchange rate is squeezing their export industries or they otherwise face unpleasant macroeconomic situations.

Here is a JSTOR piece on said question.  Here is a good paper on the overall topic (pdf).  I have never seen a good paper on why the Swiss unemployment rate rose somewhat in the early 1990s, falling again in 1996 or so I believe, but MR readers can help us out here.  I also do not have knowledge of exactly how the Swiss calculate their unemployment rate, though it is unlikely that the difference in rates is a mere statistical artifact.


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