• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

"Labour market inflexibility in Europe is the main reason why Europe is not as dynamic an economy as the United States" Critically discuss

Extracts from this document...

Introduction

"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. ...read more.

Middle

Other issues are high taxes in Europe, product market rigidities, and a large welfare system. In the Euro zone regulation is high. Europe demands different things from its economy it has different expectations. An article in The Economist newspaper puts it like so, "America has been the world's economic leader for over a century. Economic theory suggests that Western Europe should be catching up. Yet average GDP in the European Union, measured at purchasing power parity, is only three quarters of that in the United States." Chasing the Leader (2003). Living standards in the United States compared with European countries tell us a lot. A good example is Germany compared with the United States, in Germany GDP (gross domestic product) per hour is 1% higher than that of the United States but on the other hand GDP per person is 25% lower. Looking at high taxes as a reason for Europe being less dynamic than the USA, there is a lot of information explaining the reasons why high taxes might hold back the European economy. It is well known that in the United States taxes are significantly lower than that of the countries within the Euro Zone. ...read more.

Conclusion

And US law does not require companies to compensate laid-off workers or consult with worker representatives." Houseman (1994). Lay offs in Europe are more costly because of the tighter legislation. The short-term compensation helps workers in the US, this is not available to the workers in Europe that get their hours cut rather than a laid off. As William A. Douglas summed up the American situation "The United States has unusually weak provisions for job security, both in its labour legislation and in the contents of many collective-bargaining agreements. 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 ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Economy & Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Economy & Economics essays

  1. What were the main characteristics of Early Modern Europe?

    Although inflation averaged 2% per annum, it had a noticeable impact on industrial growth. Because wages lagged behind living costs, a short-term effect was increased profits and consequently the money available for investment grew. In 1575 Europe participated in the first global economy, buying Asian silks, spices, porcelain and Persian carpets using South American silver.

  2. "Corruption and hypocrisy ought not to be inevitable products of democracy, as they undoubtedly ...

    I can argue this idea with the black market in Albania. In this situation bribes can help an entrepreneurial activity to build up, using the capital coming form money laundering in black market but this activity in the future have good impact in production in the economy increasing GDP and growth.

  1. Bellway Plc is a holding company with subsidiaries; its main subsidiary company is Bellway ...

    54 With an increase in life expectancy, elder people homes are becoming less commonly available for purchase. * Consumer confidence Consumer optimism or pessimism, concerning the economy is an important determinant of economic performance.

  2. Causes of the Great Depression

    Also prospering during the 1920s were businesses dependent upon the radio industry. Postwar Deflationary Pressures During World War I many nations of Europe abandoned the gold standard in an attempt to use inflationary policies to fund government expenditure. This had a number of economic consequences in its own right.

  1. Free essay

    different sectors of economy

    (Source: www.en.wikipedia.org/wiki/Shell_Oil_Company) * Businesses in secondary Cofresh - Local Cofresh is a family run business which started over thirty years ago in UK. It is a secondary sector business which is based locally in Leicester. It is one the one of the fastest growing manufactures of authentic Indian snacks in Leicester.

  2. 'There is a great deal of evidence to support the view that the relative ...

    People in Britain were not oblivious to the fact that this country was falling behind in technical education and scientific research. In fact the fear of German competition produced increasing demand for some improvement and from the 1880s onwards some attempt was made both by the government and industry to remedy the situation.

  1. Discuss the extent to which the economic theories in the Market's Reader can be ...

    economy depends on ideas and information. The new economy has meant a change in how states try to attract business and industry. In the old economy, the factors which drew industry to a state included low taxes, cheap land, abundant low priced labor, adequate natural resources, good transportation and other physical infrastructures.

  2. Discuss the extent to which the economic theories in the Market's Reader can be ...

    Consumers have so many choices. Prices are transparent. Knowledge or 'intellectual capital' is a true resource and valuable asset to organizations in the new economy (Harreld, 62). The characteristics of a knowledge society: * Borderless ness, because knowledge travels even more effortlessly than money. * Upward mobility, available to everyone through easily acquired formal education.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work