Why is Unemployment so high in Europe?

Thanks for watching everyone. Feel free to leave questions, comments, and your general thoughts about my analysis or this issue in the comments below.

#Policy #Unions #Economics

0:00 Unemployment in Europe: An Overview
15:37 Sectoral Bargaining in Nordic Countries
25:56 Will Sectoral Bargaining come to America? California?
33:26 The History and *Potential* Causes of Unemployment in Europe
1:00:38 Spanish Unemployment
1:14:06 So why is unemployment so high in Europe?

[evanfreund]

Hi! I currently an Econ undergrad taking a (libertarian skewed) labor Econ class, although I’d personally identify as a social democrat who strongly believes in a welfare state, and some worker benefits. What I’m about to say is based off of what I’ve learned in class and some of my own speculation/analysis.

What I was taught is that unions work best when the labor supply is small and inelastic.

This Iceland can get away with 90% unionization because it’s so small that aggregate labor supply is inelastic. Norway on the other hand also has a high labor demand compared to its population, compared to the oil going to Britain, for example, so this raised labor demand might make up for unemployment from unions. Norway also has relatively less unionization compared to Finland & Sweden, although its still 5x higher than the U.S.A.

Southern Europe’s economies are generally worse off because of recent history, so I think there’s less labor demand there, especially in Greece since it’s government has been, let’s say historically irresponsible in the 2000’s, therefore business just don’t want to set up in Greece like they would in Netherlands or Norway.

In conclusion, I believe that unionization increases unemployment to a statistically significant degree, but the structural unemployment in southern Europe is mostly other structural issues.

Also just some speculation, maybe there’s a stronger unemployment effect after a certain amount. For example, if 50% of the economy is Unionized, scab type people can go work for the 50% that isn’t, but if 80% of it is, it gets harder, which is to say that maybe it only matters after a certain cutoff point, which I’d guess is somewhere between 30-60%.

Also personally a slight increase in unemployment is worth it to me to get the benefits, so long as there’s a decent unemployment program since unlike a lot of sus economists, I think subsidizing leisure is a good idea, but that’s more of a normative idea.

Keep it up! Love your videos!

[peterwright]

Very few 18-24s in the UK are going to be anywhere near a unionised workforce and those that would be unionised are going to be in the public sector - which is currently suffering from massive recruitment crises across the board (teaching, nursing etc.)

[Selfish_Socialist]

According to LTV The Value of a product= (Total works hours consumed during the process of production of that commodity for the whole economy/Total no. of said product produced in the economy )

A live example is = An economy is producing 60, 000 apples, there are 3 farms A, B and C

Farm A produces 20, 000 apples by consuming 1000 hours of direct labour and 4000 hours of indirect labour(other inputs).

Farm B produces 20, 000 apples by consuming 2000 hours of direct labour and 2000 hours of indirect labour(other inputs).

Farm A produces 20, 000 apples by consuming 500 hours of direct labour and 6000 hours of indirect labour(other inputs).

Cost of an apple for the whole economy = 15500/60000= 15.5 mins

[voodoochile]

Andrew Wilson has let this guy out of his owned cell for the day!

[oliviastratton]

I'm all for unions, but they shouldn't be required by the state. Even in the USA I've seen unions with pretty ridiculous requirements (like not allowing people to turn on the lights in a building if it's not part of their official job duties).

Market conditions change all the time, especially in a globalized world. Economies need to be flexible. If unions can create value for their members, more power to them. But if they can't, workers should be free to switch to a non-union job.

That way if union leadership can't keep up with changing market conditions, they don't take down the entire industry with them.