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

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  • Rebecca M. Blank

    (The Jerome Levy Economics Institute)

Abstract

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 opportunity to earn enough to support a family. Good policy choices will require mixing some of the best aspects of labor market flexibility with well- run activist labor market and social protection policies.

Suggested Citation

  • Rebecca M. Blank, 1997. "No Easy Answers: Comparative Labor Market Problems in the United States Versus Europe," Macroeconomics 9711003, EconWPA.
  • Handle: RePEc:wpa:wuwpma:9711003
    Note: Type of Document - Acrobat PDF; prepared on IBM PC; to print on PostScript; pages: 20; figures: included
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    References listed on IDEAS

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    1. Allen, Steven G, 2001. "Technology and the Wage Structure," Journal of Labor Economics, University of Chicago Press, vol. 19(2), pages 440-483, April.
    2. Nada Eissa & Jeffrey B. Liebman, 1996. "Labor Supply Response to the Earned Income Tax Credit," The Quarterly Journal of Economics, Oxford University Press, vol. 111(2), pages 605-637.
    3. Lindbeck, Assar & Snower, Dennis J, 1990. " Demand- and Supply-Side Policies and Unemployment: Policy Implications of the Insider-Outsider Approach," Scandinavian Journal of Economics, Wiley Blackwell, vol. 92(2), pages 279-305.
    4. Eli Berman & John Bound & Zvi Griliches, 1994. "Changes in the Demand for Skilled Labor within U. S. Manufacturing: Evidence from the Annual Survey of Manufactures," The Quarterly Journal of Economics, Oxford University Press, vol. 109(2), pages 367-397.
    5. Levy, Frank & Murnane, Richard J, 1992. "U.S. Earnings Levels and Earnings Inequality: A Review of Recent Trends and Proposed Explanations," Journal of Economic Literature, American Economic Association, vol. 30(3), pages 1333-1381, September.
    6. David G. Blanchflower & Richard B. Freeman, 1993. "Did the Thatcher Reforms Change British Labour Performance?," NBER Working Papers 4384, National Bureau of Economic Research, Inc.
    7. Richard B. Freeman & Lawrence F. Katz, 1995. "Differences and Changes in Wage Structures," NBER Books, National Bureau of Economic Research, Inc, number free95-1, April.
    8. Rebecca M. Blank, 1994. "Social Protection versus Economic Flexibility: Is There a Trade-Off?," NBER Books, National Bureau of Economic Research, Inc, number blan94-1, April.
    9. Nickell, Stephen & Bell, Brian, 1995. "The Collapse in Demand for the Unskilled and Unemployment across the OECD," Oxford Review of Economic Policy, Oxford University Press, vol. 11(1), pages 40-62, Spring.
    10. Blank, Rebecca M, 1995. "Changes in Inequality and Unemployment over the 1980s: Comparative Cross-National Responses," Journal of Population Economics, Springer;European Society for Population Economics, vol. 8(1), pages 1-21, February.
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    Cited by:

    1. Alena Bicáková, 2005. "Unemployment Versus Inactivity: An Analysis of the Earnings and Labor Force Status of Prime Age Men in France, the UK, and the US at the End of the 20th Century," LIS Working papers 412, LIS Cross-National Data Center in Luxembourg.
    2. Robert Pollin, 2002. "Globalization and the Transition to Egalitarian Development," Working Papers wp42, Political Economy Research Institute, University of Massachusetts at Amherst.

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    • E - Macroeconomics and Monetary Economics

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