Labor Market Analysis of the U.S.A and Eurozone; Similarities, Differences, and Reasons behind Them

Abstract

The significant amount of well-organized and deeply-researched scholarly articles standing to the macroeconomic theories comes to define the labor market, which is also known as “job market”, a place where the supply side of the model comes from employees seeking for the best job while the demand side represents the employers who are mainly interested in skill-match and productivity of whom they hire for their industry. In the labor market, the equilibrium wage rate is determined at the intersection point of Wage-setting and Price-setting relation which pinpoints the relative wage on the vertical axis and the natural rate of unemployment on the horizontal axis in R^2. In order to comprehensively picture the labor market and its preliminary indicators that can be considered as the unemployment rate, and labor force participation rate, the macroeconomic perspective must be introduced in such a way that the role of investors, policymakers, and participants of the model is imaginable. In view of that, this small-scoped research conducted considers trade reforms, labor market outcomes, foreign competition, and labor market adjustment as well as the effect of the economic and financial crisis to scrutinize the current labor market conditions, similarities, and differences in the U.S.A and Eurozone respectively.