Why is Europe's employment rate almost 10 percent lower than that of the United States? This "jobs gap" has typically been blamed on the rigidity of European labor markets. But in Services and Employment, an international group of leading labor economists suggests quite a different explanation....

Natural rate theory has dominated interpretations of economic trends and policy prescriptions over many decades, as economists contrasted high unemployment and lower inequality in Europe with the great American job machine. This paper discusses the relationship between skill structure and wage...