Question

Unemployment rates have been higher in many european countries in recent decades than in the united states. is the main reason for this long-term difference in unemployment rates more likely to be cyclical unemployment or the natural rate of unemployment? explain briefly

Answer 1

The main reason for the long term difference in unemployment rate is as a result of NATURAL RATE OF UNEMPLOYMENT.
European rate of unemployment has been higher because of the conditions that underlie the demand and supply of labor in Europe. Many European countries have a combination of welfare and unemployment benefits and other labor laws which impose additional costs on businesses when people are hired and when they are to be laid off. All these work together to affect the rate at which companies employed workers.