Is the United States a Good Model for Reducing Social Exclusion in Europe?

Abstract

Advocates of U.S.-style labor market flexibility have long argued that Europe could generate jobs and lower unemployment if the continent's economies followed the example of the United States. More recently, proponents of the U.S. model have suggested that labor market deregulation also holds out the possibility of reducing the problem of “social exclusion” in Europe, primarily because unemployment is one of the worst forms of social exclusion and contributes to other forms of social marginalization. The authors review a broad range of social and economic indicators and conclude that the United States fares poorly compared with much of Europe on social measures. Meanwhile, U.S.-style flexibility has had only mixed success in improving employment outcomes, and the U.S. economy consistently provides lower levels of economic mobility than economies in Europe.