1. What are some of the reasons why the unemployment rate in the United States is traditionally lower than in Canada and some Western European countries?
Unemployment is a big issue that affects every nation on the planet. The rate of unemployment is an indicator of the number of unemployed people. As a result, it is determined by dividing the number of unemployed people by the total number of people in the labor force and then translating it to a percentage. Individuals in the workforce include working, self-employed, or unemployed (Hoffmann & Lemieux, 2016). Since countries vary in terms of economic strength, unemployment rates differ as well. Thus, this paper focuses on the reasons why the rate of unemployment is low in the United States in comparison with some Western European countries and Canada.
The period within which individuals search for jobs directly affects the rate of unemployment in a particular country. The longer a person waits for a job, the higher the rate raises. In the United States, the workers are eligible for low unemployment insurance benefits, making the opportunity cost of job search high unlike in case of Canada and some Western European countries. Therefore, the divergence nature of the unemployment insurance is just one of the reasons why the rate of unemployment differs in these countries (Hoffmann & Lemieux, 2016).
Also, the rise in the real wages in some Western European countries and Canada has increased the pressure on employers to use technology and labor saving capital as compared to the United States. When technology replaces more labor, people lose jobs, and this increases the level of unemployment (Hoffmann & Lemieux, 2016). Thus, the diversity in regulating the level of wages contributes to the differences in the rate of unemployment in these countries.
In conclusion, for the level of unemployment to be reduced, proper government and institutional policies should be stated and implemented. Since the change in the labor market and the economy affects the rate of unemployment either positively or negatively, proper measures should be put in place and adhered in order to decrease the rate of unemployment.
Hoffmann, F., & Lemieux, T. (2016). Unemployment in the Great Recession: A Comparison of Germany, Canada, and the United States. Journal of Labor Economics, 34(S1), S95-S139.