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01 Jul 07

US-vs-Europe structural rigidities: A re-think | vox - Research-based policy analysis and commentary from Europe's leading economists

EU rigidities are well known, but low US energy-productivity and low social mobility (probability of the poor breaking out of poverty) are less often noted. Structural reforms are necessary if the US is to emulate European successes on social mobility and energy efficiency.

To give a few examples: According to the OECD-index of employment-protection legislation, Ireland, Belgium, Denmark and Italy have about the same level of employment-protection (call it a structural rigidity). Yet since the start of the decade, Ireland has experienced an average yearly productivity growth rate of 3%, Denmark of 1.6%, Belgium of 1.1% and Italy a dismal 0.2%
4 more annotations...
- First, there is the low productivity of energy use in the US compared to Japan and the EU.
- mobility
- Structural reforms will be necessary in the US if it wants to emulate the success of European countries in organising social mobility.
- Compared to the US, Europe has structural strengths and weaknesses. Seen from this perspective, it is not evident that Europe suffers more from structural weaknesses than the US.