Seminars

Abstract

The effect that the economic crisis triggered by Covid-19 is having on unemployment could hardly differ more than in the United States and Europe. This divergence is also true of the political reactions to it. Whereas the 27-member states of the European Union (EU-27) have managed to keep unemployment in check largely through heavy reliance on short-time work, the United States is experiencing mass unemployment reminiscent of the Great Depression of the 1930s. Instead of short-time work, the United States has resorted partly to massive social transfers for certain groups of the unemployed, which may temporarily even raise some incomes to levels above those offered by employment. The sociopolitical problems and the limits of economic policy associated with short-time work in the EU-27 are becoming more and more apparent. It is therefore not yet clear which of these two economic and social systems will be better able to cope in the long term with the industrial transformation accelerated by the crisis. This essay argues that the European approach promises a more humane and effective solution to the crisis, but only if the member states and the European Union find a way out of short-time work and learn from some of the strengths of the U.S. system.