Changes in inequality and unemployment over the 1980s comparative cross-national responses (original) (raw)

Inequality and Unemployment in Europe: The American Cure

SSRN Electronic Journal, 2000

In this paper we show that inequality and unemployment are related positively across the European continent, within countries, between countries and through time. This contradicts the often-repeated view that unemployment in Europe is attributable to rigid wage structures, high minimum wages and generous social welfare systems. In fact, countries that possess the low inequality such systems produce experience less unemployment than those that do not. Moreover, large inter-country inequalities across Europe aggravate the continental unemployment problem. There is no paradox in low American unemployment. It stems in part from that country's continent-wide programs of redistribution, including the Social Security System, the Earned Income Tax Credit, the federal minimum wage, and a uniform regime of monetary policy geared toward full employment, all of which reduce inter-regional inequality and all of which we recommend for adoption by the European Union.

European versus US unemployment: Different responses to increased …

DISCUSSION PAPER …

According to Paul Krugman, "the European unemployment problem and the US inequality problem are two sides of the same coin". In other words, both continents have had the same shift in demand towards skill; in the US relative wages have adjusted and in Europe not.

Inequality and Labour-Market Performance: A Survey Beyond an Elusive Trade-Off

SSRN Electronic Journal, 2000

Abstract: In this paper we assess the evolution of employment and wage inequality in Europe and the US labour markets over the past two decades. We find that the salient trends in wage structures are more complicated than implied by the so-called “unified theory.” Furthermore there is no clear cross-country correlation between changes in wage and employment rates by skill categories. This brings us to consider in detail other factors mentioned in the literature as contributing to poor labour-market performance in Europe. ...

No Easy Answers: Comparative Labor Market Problems in the United States versus Europe

1997

Over the last two decades, virtually every western European nation has faced high and persistent unemployment. In frustration, many Europeans have looked to the United States, with its lower unemployment rates, as a model of labor market flexibility. The U.S. model has become less attractive, however, an analysts have come to recognize the extent of rising wage inequality in the United States over the past two decades, including sharp declines in wages among the less skilled. In short, both European countries and the United States have faces labor market problems in recent years. This article discusses some of the ways in which these labor market problems on either side of the Atlantic reflect different institutional responses to related economic problems. Both the U.S. and the European experiences demonstrate that there are no easy answers about how to operate a labor market which generates plenty of jobs for younger and less-skilled workers and which also offers these workers the ...

of LaborEarnings Inequality in Europe: Structure and Patterns of Inter-Temporal Changes

2007

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Differences in Unemployment by Educational Attainment in the US and Europe: What Role for Skill-Bias Technological Change and Institutions?

2008

This study is about differences in unemployment rate by educational attainment between the US and Europe over the past three decades. Apart from usual explanatory variables, like wage differentials between educational groups in the two regions, specific attention will be given to complementarities between capital and skilled labour. Increasing capital stock raises skilled wages more than unskilled wages, i.e. raises demand for skilled workers and hence leads to a relative fall in unemployment among high skilled. We find that this skilled biased technology effect is larger in the US than in Europe. European institutions favour wage equality but these also imply less incentives to migrate to higher education classes. This has a depressing effect on skilled labour supply. This means there is less mobility in the European labour market compared to the US, not just from a spatial but also from an educational perspective.

Structure of the labour market and wage inequality: evidence from European countries

Quality & Quantity, 2016

The aim of this paper is to explore how the structural changes that have occurred in the labour market, in terms of employment composition by skill levels, affect wage inequality in three developed countries of Western Europe that are in close geographical proximity but have disparities in their labour market characteristics. More precisely, the analysis compares, from an international perspective, France, Germany-whose labour markets have been characterised in recent years by job polarization and the upgrading of occupations, respectively-and Italy, where neither of the two phenomena can be clearly identified. Using EU-SILC (European Union-Survey on Income and Living Conditions) data, in the first step, RIF-regression (Recentered Influence Function) enables an exploration on the primary factors that are likely to explain the differences in generating personal labour earnings and, in the second step, a decomposition of the change in wage inequality between 2005 and 2013 to evaluate how much of the overall gap is accounted for by the endowments in employees' individual characteristics (composition effect) rather than the capability of labour markets to transform these characteristics into job opportunities and earnings (wage structure). Regarding France and Germany, the main results highlight how the endowment effect plays a key role in decreasing or, at least, not increasing wage inequality, whereas in Italy the rising inequality may be due to the lower efficiency of the country's labour market in creating job opportunities, better job-related careers, and higher-salaries for employees.