Chief disputes labor study by Boston Fed economist

WASHINGTON -- Federal Reserve chairman Alan Greenspan criticized a study by an economist at the Boston Fed that concluded the job market is probably weaker than suggested by the low unemployment rate.

''We at the board do have some questions about the Boston Federal Reserve study," Greenspan told a House panel yesterday in response to a question from Representative Barney Frank, a Massachusetts Democrat. ''We think that certain calculations that were made at the Boston Fed inadequately captured what was going on."

The study by Katharine Bradbury, a senior economist at the Boston Fed, was the subject of a column by Princeton University economist Paul Krugman in The New York Times on July 18. Krugman said the study suggests millions of people have dropped out of the job market and thus aren't counted in employment surveys.

Bradbury said the unemployment rate would be 1 percentage point to 3 percentage points higher if some of the people that had left the labor force returned. The jobless rate dropped to 5 percent last month, the lowest since September 2001, according to Labor Department figures.

Bradbury specifically cited the drop in participation by women and teenagers.

The Boston study didn't take into account ''structural changes" in the economy, such as the stabilization in the participation rate for women in recent years after increases in previous decades, Greenspan said.

Bradbury, reached by telephone, said she couldn't immediately respond because she didn't hear the testimony. She said she also wanted to discuss the issue with a regional Fed spokesman.