Understanding differences in job growth in Europe, Canada and the United States: what went wrong in the United States?

June 2015
in Social Policies in an Age of Austerity: A Comparative Analysis of the US and Korea, eds. John Karl Scholz et al. (Cheltenham: Edward Elgar Publishing, 2015)

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Alan Krueger attempts to understand what went wrong in the US job market in the 2000s and why job growth slowed down even before the Great Recession that began in 2008. Because Canada is similar to the United States in terms of geography, technology, productivity and exposure to global markets, particular attention is devoted to comparing job growth in Canada with the United States. Krueger cites six possible reasons for weak job growth, provides evidence for two of them (the aging workforce and health insurance as a fixed cost of employment) and conjectures on the others. A rough calculation to decompose the change in the employment-to-population ratio suggests that about a third of the drop can be attributed to the secular trend and about two-thirds can be attributed to the cycle. Assuming that the factors for the secular trend are still present, he turns to possible causes of the downward trend: age, education and gender.