Arnold Kling

Europeans More Productive than U.S.?

Arnold Kling, Great Questions of Economics
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Brad DeLong posted an article on his blog that asserted that labor productivity is higher in several European countries than in the U.S. I was surprised, as this runs counter to the fact that overall GDP per capita is higher here. I emailed him, and he sent me this link to a Bureau of Labor Statistics publication, which provides the data along with some perspective.

...productivity in France is above that of the United States. But, this productivity advantage is eroded by the effects of fewer working hours and lower labor force participation rates, particularly among the working age population.

...efforts by France to increase labor force participation might reduce that country's productivity while increasing per capita income. Moreover, relatively high wage costs in European countries may have induced rapid substitution of capital for labor in these countries relative to the United States...

Or, as DeLong put it in his email,

if you want to boost average labor productivity above $10 an hour, make it uneconomic to employ anyone who would produce less than $10 of stuff an hour.

Discussion Question. What are some of the labor policies in Europe that make it uneconomic to employ workers who would have jobs if they were in the United States?

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