9. The unemployment rate is typically lower in the United States than in most Eu
ID: 1163860 • Letter: 9
Question
9. The unemployment rate is typically lower in the United States than in most European countries, and the duration of unemployment in the United States is much less likely to be one year or more than in Europe. For example, in December 2016, the unemployment rate was 4.7 percent in the U.S. compared to 8.2 percent that same month for the countries in the European Union. France’s unemployment rate in December 2016 was 9.6 percent.
Separately consider each of the following differences between the United States and most European countries. Explain whether each difference—considered separately—should make the unemployment rate higher or lower in Europe (relative to the United States). Include as part of your answer the type of unemployment that the factor would affect.
a) The United States spends much less on government training programs than most of Europe.
b) European countries typically have strict job-protection policies that require notification to the government and consultations with worker representatives before layoffs can be made.
c) In many European countries, workers are eligible for relatively-generous unemployment payments that often last for a year or longer. These unemployment payments can equal 70 percent of the wages that had been earned. Furthermore, some European countries generously provide income through social insurance programs even after eligibility for unemployment payments has been exhausted.
Explanation / Answer
A lesson Europe since skills for employment will be found more in European workers. Thus would reduce structural unemployment
B more unemployment The reason is that many firms do not enter Europe for this specific reason. They prefer other destinations. Thus again it is structural unemployment (increase) Note it would reduce unemployment in the sense that less labour can be fired. But the first effect dominates
3 It will lead to greater unemployment as workers have less incentive to work. This will increase cyclic unemployment
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