The "terrible" trap of low employment rates
Some OECD countries (Greece, Italy, Spain, Belgium, France, Portugal) have a very low employment rate. This has led to a "terrible" trap: The low employment rate leads to significant income inequality before redistribution, and therefore to a need for large-scale redistributive policies; But the low employment rate leads to a low level of potential GDP, and therefore to low tax revenues, which makes it very difficult to implement the required redistributive policies. The low employment rate trap is therefore that either countries have to refrain from the redistributive policies that it makes necessary, or there will be a chronic fiscal deficit.