Labour market inflexibility in Europe is the main reason why Europe is
not as dynamic an economy as the United States” Critically discuss.
“Labour market inflexibility in Europe is the main reason why Europe
is not as dynamic an economy as the United States”
In not more than 2500 words and not less than 1500, critically discuss
the above statement.
Introduction
Today labour markets in Europe and the USA are often compared and
discussed. The general view seems to be that the US has a more dynamic
economy, people tend to believe Europeans are worse off than
Americans. The main reason given for Europe lagging behind the USA
economically is “Labour market inflexibility” other reasons why the
European Economy is not as dynamic, include labour rigidities, high
taxes, and too big an emphasis on the welfare system. This essay will
discuss why US labour markets are considered dynamic and superior, in
doing this unemployment, employment and wages.
A Historic Explanation
Historically the USA and Europe are very different. The USA is a
relatively modern country and Europe consists of many countries each
with its own individual past. Differences within Europe are a major
factor when critically discussing why Europe is behind the USA on an
Economic basis. The EU is a group of countries with very diverse
countries. Each has varied economic, and to an extent political
circumstances. Historically, the Second World War changed the
countries in Europe a great deal the effect on the USA was little in
comparison.
European Labour Markets
Labour markets can be defined as the way employers and workers are
brought into contact with each other. This is how conditions of work
and wages are decided. Some may be ...
... middle of paper ...
...greements. For decades it has been common for
US employers to “lay off” workers for weeks or months during times of
slack product demand, and then bring them back” Douglas (2000).
On the other hand there are many countries in Europe that apply
policies that encourage companies to train workers. “Workplace
training increases job security in several ways. Employers are more
reluctant to lay off workers in whom they have heavily invested,
particularly during a temporary downturn.” Houseman (1994). Europeans
therefore tend to have more transferable skills but overall the United
States is still more dynamic an economy.
Conclusion
Evidence shows that the United States is a more dynamic Economy than
Europe. There are several contributing factors to why this is
histioric reasons, issues of welfare playing to great a role in
Europe, also the United States.
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