chapter  1
26 Pages

Comparing welfare in Europe and the United States


Starting immediately after the Second World War with a level of labour productivity barely half that of the United States, by the mid-1990s Europe had caught up to near parity and some nations had exceeded the American level of productivity.1 Yet over the same period Europe’s relative per-capita income did not exhibit a similar catching-up process. The ratio of European to US income per capita since 1970 has stagnated at between 70 and 75 per cent. How could Europe be so productive and yet so poor?