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Asymetric longrun dynamic employment decision


One of the outstanding macroeconomic features of the past 20 years has been the divergent employment performance of the United States and western Europe.
Employment in the United States grew from around 100 millions to 120 millions over the 1980s, and grew at 1.9% per year from 1971 to 1988; in Europe, employment fluctuated around 106 millions in the 1980s, and grew at an average of 0.3% over the longer period.
Research has been carried out in order to investigate this relative employment performance using a detailed industrial disaggregation, and a comparison of employment growth over different phases of the cycle. The question of whether the United States has succeeded at the expense of Europe (ie whether the United States has simply attracted a higher share of 'world employment') is addressed.

Considering the question of reallocation of jobs, there is no strong evidence of any significant pattern of differences between industries in comparing Europe and the United States. There is weak evidence that for some European countries, and for Europe as a whole the 1980s, the United States is better at reallocating employment, that is, the employment growth difference is bigger in faster growing industries than in declining industries. Looking at the different phases of the cycle, there do appear to be interesting asymmetries both within and between the 2 economies. On the unweighted data, employment typically both falls faster when falling and rises faster when rising in the United States. Using the weighted data, the main contrast between the United States industries and the European industries is in the upswing. That is, the 2 economies perform similarly when employment is falling, but employment in the United States rises more rapidly and more frequently. Employment growth experience in United States industries is much more diverse than in European industries: all United States industries generally experience both significant growth and significant declines while the European industries on the other hand, generally seem to either grow and not decline, or decline and not grow. The major difference among the European industries is in the downswing growth rates.

Funding Scheme

CSC - Cost-sharing contracts


Rijksuniversiteit Limburg
6200 MD Maastricht

Participants (2)

126,Calle Madrid 126
28903 Getafe
United Kingdom
Woodland Road 8
BS8 1TN Bristol, Clifton