Question

1. Please explain why US has a general higher labor force participation rate than European countries.

Answer 1

In terms of job creation, US has the most advantages of establishing many companies and industries due to the vastness of the country and availability of natural resources.  US has strong economic policy which also helps to expand the labour market by creating more jobs as well as deals well with financial crisis. During the 2008 global financial crisis, the unemployment rate of the country fell faster which was much below than the European countries. But the effective policy response of the country addressed the situation very well and helped people to regain jobs again. Participation of women in the US labour market from 1970's was dramatic which changed the general participation of labour force in the country. As the country has higher divorce rate, lower fertility rate of female due to late marriage; women here genuinely want to be independent and financially secured. Besides as large number of companies, industries, organisations prefer to have their base in the country, they require large number of labour force due to their high demand for workers which make many people to migrate into the country creating a higher labour force.

On the other hand, European countries have smaller labour force compared to US for many reasons. The European countries are much smaller in size compared to US. Scanty natural resources and extreme climatic condition prevent most of companies and organisations not to invest in these countries which lowers the potentiality of job creations. Besides European countries have lower population rate compared to US where negative population growth rate trend is found. Women participation in the work force is lower in European countries and those working women are engaged mostly in low paying jobs. Global financial crisis hit the European countries badly where many people lost their jobs. But the unemployment rate in these countries were far below the rates of US. But due to lack of ineffective economic policies, the rate of unemployment went up compared to US which was a great loss to the European economy. The prospects of job creation in European countries are very less than US due to which migration of work force in these countries are minimum making the Labour market of US to expand with time.