Causes of the 1980s Slump in Europe

E. S. Phelps and

ESP

E. S. Phelps Columbia University

J.-P. Fitoussi

JF

J.-P. Fitoussi University of Paris and Observatoire Francais des Conjonctures Economiques

Discussants: Jeffrey D. Sachs

JDS

Jeffrey D. Sachs

UNEMPLOYMENT in Europe has reached levels in this decade that have
not been seen since the Great Depression. The annual unemployment
rate in the European Economic Community rose sharply in 1981 and
continued rising to its 1984-85 plateau. In contrast, the U.S. unemployment
rate, which also rose to a postwar record level, nearly regained its
1980 level by 1985, as shown below.