What the euro zone should envy from the United States: The high productivity gains, but not the low unemployment rate

Productivity gains have once again become markedly higher in the United States than in the euro zone, which means potential growth is far higher in the United States. This is consistent with the effort to modernise capital, which is more significant in the United States. The unemployment rate is also much lower in the United States than in the euro zone, but when comparing participation rates (the proportion of the working-age population present in the labour market), and by calculating them in the same way in the United States and the euro zone, we see that the only reason why the unemployment rate is lower in the United States than in the euro zone is that the participation rate is lower in the United States. The euro zone should therefore envy the United States’ productivity gains, but not its unemployment rate: the euro zone has a disadvantage as regards corporate modernisation, but not as regards the capacity to create jobs.