Date Published:Jul 1, 1999
A conventional wisdom holds that the European and American economies represent different ways of organising the generation and distribution of wealth to produce similar outcomes in terms of economic performance. Around a common long–run growth rate of 2.5% per annum, the United States has opted for slow productivity growth, more employment and an army of working poor while Europe has opted for higher productivity growth, more unemployment and a much tighter distribution of incomes. Recently this wisdom has come under attack as growing evidence of superior US performance in growth and improved performance on productivity along with very low unemployment has constrasted with anemic European growth and a very poor employment performance. Under this new scenario, rigidities in European product and particularly labour markets are undermining recovery and leading to jobless growth of modest proportions.