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....

Summary The most popular explanation for greater job creation in the US than in Germany is that greater dispersion of wages coupled with less regulations governing the labour market and the product market in the US has induced firms to employ many less skilled workers. While popular, these...