On the Krugman part, I think I addressed what the commenter is saying in the three paragraphs of the post beginning with "However, the employment-population ratio can fall ..." I'll try again, with as little ancillary discussion as I can. The commenter writes (with my emphasis in bold added):
You use one piece of anecdotal information to try and refute Krugman, but you misconstrue what he said. He did NOT say that every person who dropped out of the labor force did so because they stopped looking for work. What he said was the drop in the unemployment statistics was only due to a set of people dropping out of the statistics. This can be true even if your wife dropped out of the labor force as you described. The person who took her job may not have been unemployed. That person may have been reentering the labor force so even though the job did not "disappear" no net employment gain happened.It is true that he did not say exactly that (but nor does my argument require that he said exactly that). The issue, in the commenter's language, is the particular set of people who are dropping out of the statistics. Let's take another look at what Krugman said:
... unemployment declined only because some of those without jobs stopped actively looking for work, and therefore dropped out of the unemployment statistics.As I said, Krugman's use of the word "only" requires that there were no other causes for the reduction the unemployment rate other than the one he cites, "some of those without jobs stopped actively looking for work." The statement is falsified by any instance in which a person voluntarily (and not as a response to some diminution in his or her labor market opportunities) chooses to retire, raise a family, volunteer, or go back to school, provided that s/he is replaced on the job by an unemployed person who was actively looking for work. Like an unemployed person stopping an active search, a voluntary exit that allows an unemployed person to become employed causes the unemployment rate to decline, the labor force participation rate to fall, and the employment-population ratio to stay the same.
Krugman's use of the word "only" requires that there be no such instances. I think I am on much firmer ground asserting that there is at least one such person than Krugman is in asserting that there are no such people in a labor force of over 140 million people. Nothing else in any of the previous posts is necessary to demonstrate his error.
Thanks again for the comments.