Incomes, Hours of Work, and Equality in Europe and the United States

Abstract

The paper discusses the European Union as a union of primarily small European states, a union whose parallel emphasis on efficiency and fairness, including deep respect for human rights, holds the key to Europe’s economic and social advances over the years. The paper shows that adjusting conventional economic indicators of living standards such as gross domestic product or gross national income per capita to reflect also social factors (such as hours of work and equality of income) places Europe ahead of the United States. Further, adjustments for education attainment and public health, as made by the United Nations Human Development Index, similarly favor Europe vis-à-vis the US. While expansion fatigue has temporarily slowed the momentum of the widening and deepening of European integration, Europe can expect to benefit from the accession of more small states to the EU. This will further advance the EU’s economic and social position in the world.

The paper reflects my belief that too few economists and other academics defend the European ideal against its emerging detractors, and concludes with my personal comments on the potential benefits of EU membership for Iceland. In this spirit, the paper was presented at the 28th Villa Mondragone International Economic Seminar on the theme “Facing EU Challenges, Relaunching Sustainable Growth” in Rome, 23–24 June 2016. I wish to thank Magnús Bjarnason, Eduard Hochreiter, Arne Jon Isachsen, Ólafur Ísleifsson, Gylfi Magnússon, Jeffrey Sachs, and especially Per Magnus Wijkman for helpful comments on earlier versions of the text.