Tags: Krugman | US | Europe | employment

Krugman: Europe Beats US on Key Employment Measure

By    |   Tuesday, 27 May 2014 11:18 AM

Despite the eurozone crisis, Europe has achieved a remarkable and almost secret success. In fact, by one key employment measure it's handily beating the United States.

In much of northern Europe, adults in their prime working years of 25 to 54 are much more likely than are similarly aged Americans to be employed, according to New York Times columnist Paul Krugman.

That refutes the conservative argument that European unemployment is high because of high taxes in their extensive welfare states, Krugman writes.

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The argument is that a public safety net creates a disincentive to work and high taxes discourage job creation. Conservative free-market ideologues typically cite France as an example of this "Eurosclerosis."

But the prime-age employment rate in France surpassed America's early in the Bush administration, he notes. Other countries with strong social safety nets like Sweden and the Netherlands have even higher employment rates for the 25-to-54 age group.

Young French people are less likely to work than their American counterparts largely because the state provides more aid to students so they don't have to work while in school, Krugman explains. The French also retire earlier, partly due to generous early retirement incentives.

"But on the core issue of providing jobs for people who really should be working, at this point old Europe is beating us hands down despite social benefits and regulations that, according to free-market ideologues, should be hugely job-destroying."

Sure, Southern Europe is suffering through an economic crisis, but that's due to the euro, a continent-wide currency that lacks a banking and fiscal union. Conservatives maintain that Southern European countries are collapsing welfare states.

"And they keep saying that even though some of the strongest economies in Europe, like Germany, have welfare states whose generosity exceeds the wildest dreams of U.S. liberals," Krugman counters.

When it comes to employment for workers 25 to 54, the United States ranks 24th out of 34 Organization for Economic Co-operation and Development countries, economist Antonio Fatas writes on his blog. Most of the countries near the top have high taxes, including work taxes, and large welfare states, he notes, adding that the data show taxes and government benefits do not discourage job creation.

Switzerland leads the list, while the United States is sandwiched between the Slovak Republic and Portugal. The United States, Fatas says, had a better employment rate for the 25-to-54 age group in 2000, but since then it has had one of the worst job creation records for the age group.

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Despite the eurozone crisis, Europe has achieved a remarkable and almost secret success. In fact, by one key employment measure it's handily beating the United States.
Krugman, US, Europe, employment
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2014-18-27
Tuesday, 27 May 2014 11:18 AM
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