Chapter 12 Outline
VII. UNEMPLOYMENT IN EUROPE
A. Impediments to Hiring
1. In most European countries, minimum wages are higher than in the United States.
2. Labor unions in most European countries are more powerful than those in the United States.
3. The relatively high social security and other payroll taxes that European firms must pay discourage hiring.
4. Because it is costly to discharge workers, firms are reluctant to replace workers.
5. In many European countries, government regulations and controls make it difficult for entrepreneurs to start or expand new firms.
B. Impediments to Accepting Employment
1. Unemployment benefits in most European countries are relatively higher and can be drawn for a longer time than in the United States.
2. High tax rates combined with loss of unemployment and other benefits reduces the incentive for unemployed persons to accept employment.
C. Conclusion
1. Unemployment rates in most European countries are higher than in the United States.
2. To lower unemployment rates, policy-makers must reduce or eliminate impediments to hiring and accepting employment.
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