Federal Reserve Chairman Alan Greenspan criticized a study by an economist at the Fed Bank of Boston 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,” Mr. Greenspan told the House Financial Services Committee today in response to a question from Rep. 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 a senior economist at the Boston Fed, Katharine Bradbury, was the subject of a column by Princeton University economist Paul Krugman in the July 18 New York Times. Mr. Krugman, a frequent critic of the Bush administration, said the study suggests millions of people have dropped out of the job market and thus aren’t counted in employment surveys.

Ms. 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% last month, the lowest since September 2001, according to Labor Department figures.

“Current low rates of labor market participation thus potentially represent considerable slack in the U.S. labor market,” Ms. Bradbury wrote. She 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, Mr. Greenspan said.

Ms. 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 first with a spokesman for the regional Fed.

The labor force participation rate, or the number of Americans employed or looking for work as a percentage of the entire population, was 66% in June, close to an almost 17-year low of 65.8% reached in March. The rate had been as high as 67.3% for several months in 2000, a record.

Ms. Bradbury said that 1.6 million to 5.1 million people are “hypothetical participants” in the labor market in addition to the 7.9 million people officially counted as unemployed when her research was presented earlier this year.

Mr. Frank seized on the Boston Fed study to question Mr. Greenspan on the need for further Fed rate increases given such evidence that the job market wasn’t as strong as thought.

Mr. Greenspan, a Republican, said in his prepared testimony that “slack in labor and product markets has continued to decline.” To prevent inflation from accelerating as unemployment drops and the economy grows “will require the Federal Reserve to continue to remove monetary accommodation,” he said. That means raising interest rates.

Mr. Greenspan wasn’t the first to challenge the study.

An economist at Goldman Sachs, Andrew Tilton, said in a report July 18, the day Mr. Krugman’s column appeared, that the labor force participation rate of women has changed for reasons other than the economy.

“A multi-decade trend that has lifted their participation rate near that of men leveled off roughly a decade ago, making comparisons to past cycles misleading,” Mr. Tilton said. Analysis of teenagers’ participation also is tricky, he said.

Based on today’s testimony, Mr. Greenspan “does think that slack in the labor market has been reduced significantly,” Mr. Tilton said in an interview. “That essentially the unemployment rate is a good measure of what is going on. It’s pretty clear he sees rates needing to go higher.”

Goldman forecast the Fed’s target rate, currently at 3.25%, will reach 4% by the end of the year.