Download publication

Policy Brief

Europe’s social problem and its implications for economic growth

The European Union faces major social problems. More than six million jobs were lost from 2008-13 and poverty has increased. Fiscal consolidation has generally attempted to spare social protection from spending cuts, but the distribution of adjustment costs between the young and old has been uneven; a growing generational divide is evident, disadvantaging the young.

By: and Date: March 31, 2014

See also comment ‘Interactive map: Europe’s social polarisation and the generational struggle

The European Union faces major social problems. More than six million jobs were lost from 2008-13 and poverty has increased. Fiscal consolidation has generally attempted to spare social protection from spending cuts, but the distribution of adjustment costs between the young and old has been uneven; a growing generational divide is evident, disadvantaging the young. The efficiency of the social security systems of EU countries varies widely. Countries with greater inequality tended to have higher household borrowing prior to the crisis resulting in more subdued consumption growth during the crisis. The resulting high private debt, high unemployment, poverty and more limited access to education undermine long-term growth and social and political stability.

Policymakers face three main challenges. First, addressing unemployment and poverty should remain a high priority not only for its own sake, but because these problems undermine public debt sustainability and growth. Second, bold policies in various areas are required. Most labour, social and fiscal policies are the responsibility of member states, requiring national reforms. But better coordination of demand management at European level is also necessary in order to create jobs. Third, tax/benefit systems should be reviewed for improved efficiency, inter- generational equity and fair burden sharing between the wealthy and poor.

Download Publication

Europe's social problem and its implications for economic growth

Policy Brief

Europe’s social problem and its implications for economic growth

16m read (8 pages)

Download publication

Topics

Tags

Comments

Read about event Download PDF

Upcoming Event

8 
Sep
2015
09:00

Bruegel's Annual Conference

Bruegel's Annual Conference is a closed-door event with three panel discussions on banks and capital markets, growth perspectives, and monetary policy and central banking.

Speakers: Wassim Chourbaji, Zsolt Darvas, Anna Ekström, Luc Frieden, Otmar Issing, Joanne Kellermann, Rachel Lomax, Mario Monti, Alvaro Nadal, Jean Pisani-Ferry, Dirk Schoenmaker, Paul Sheard, Jean-Claude Trichet, Nicolas Véron and Guntram B. Wolff
Read about event

Upcoming Event

8 
Sep
2015
13:00

What future for Europe's social models?

Protests and strikes across the continent have shown that European publics are reluctant to accept major cuts in social spending, but what lies ahead for Europe's social models?

Speakers: Tito Boeri, Ylva Johansson and Guntram B. Wolff
Read article More on this topic

Opinion

Guntram B. Wolff

Griechenlands Schuldenlast kann und muss im Euroraum erleichtert werden

Die Verknüpfung von Schuldendienst mit der Mitgliedschaft in der Währungsunion führt zu einem Teufelskreis, der das Wachstum schwächt und damit eine Rückzahlung der Schulden unwahrscheinlicher macht. Wir schlagen vor, den Teufelskreis durch eine Bindung der Kreditzinsen an das Wachstum der griechischen Wirtschaft zu durchbrechen. Ein Griechenland ohne Wachstum soll keine Zinsen und keine Tilgung zahlen. Je stärker das Wachstum, desto höher die Zinsen und Rückzahlungen an die europäischen Gläubiger. 

By: Armin von Bogdandy, Marcel Fratzscher and Guntram B. Wolff Topic: European Macroeconomics & Governance Date: July 22, 2015
Read article

Blog Post

Ashoka Mody
Dae Woong Kang

The birth of European macroeconomics

In 1997, Milton Friedman warned that when politics clashes with economics, the outcome is not a pretty one. This column reviews some of criticisms and weaknesses of the European macroeconomic system, taking a historic look at the decades leading up to the creation of the euro. The clash Friedman warned about is manifest now in Greece. The economic logic for dealing with Greece is clear, but politics continue to defy economics.

By: Ashoka Mody and Dae Woong Kang Topic: European Macroeconomics & Governance Date: July 14, 2015
Read article More on this topic More by this author

Blog Post

Silvia Merler

The Greek last-chance proposal: stepping backwards to move forward?

Greece sent its proposal to Brussels yesterday, in an attempt to pave the way for the negotiation of a third ESM programme. The package makes significant concessions to the creditors’ position, and it is well worth examining the proposal in detail.

By: Silvia Merler Topic: European Macroeconomics & Governance Date: July 10, 2015
Read article Download PDF

Working Paper

pad_200_283_The_political_economy_of_financial_crisis_policy_COVER_02

The political economy of financial crisis policy

Government intervention to stabilise financial systems in times of banking crises ultimately involves political decisions. This paper sheds light on how certain political variables influence policy choices during banking crises and hence have an impact on fiscal outlays. 

By: Mícheál O’Keeffe and Alessio Terzi Topic: European Macroeconomics & Governance, Finance & Financial Regulation Date: July 7, 2015
Read article Download PDF

Policy Contribution

The effects of ultra-loose monetary policies on inequalityEuropean Parliament

The effects of ultra-loose monetary policies on inequality

This Policy Contribution was prepared for the European Parliament Committee on Economic and Monetary Affairs. It assesses the impact of ultra-loose monetary policies on income and wealth distribution in the euro area.

By: Grégory Claeys, Zsolt Darvas, Alvaro Leandro and Thomas Walsh Topic: European Macroeconomics & Governance, European Parliament Date: June 24, 2015
Read article More on this topic More by this author

Blog Post

Jérémie Cohen-Setton

The 4% growth target

What's at stake: To contrast with President Obama’s middle class economics, the Republican Party – from Rand Paul’s proposal to repeal the entire IRS code to Jeb Bush’s 4% growth target – is positioning itself as the party that can drastically expand potential growth in the 2016 presidential election.

By: Jérémie Cohen-Setton Topic: Global Economics & Governance Date: June 22, 2015
Read about event

Upcoming Event

17 
Nov
2015
10:00

Vision Europe Summit 2015

The theme of the Summit's first edition is “The Future of the Welfare State”.

Read article More on this topic More by this author

Blog Post

Karen E. Wilson

How to unleash the financing of high growth firms in Europe

Access to capital is critical for SMEs and start-ups. In particular, growth finance is important for young innovative firms, which are the drivers of growth and jobs in the economy. In this blog post, Karen Wilson shares 10 recommended actions points  to the European Commission to unleash and attract venture capital and other forms of entrepreneurial financeo help ventures grow in Europe.

By: Karen E. Wilson Topic: Innovation & Competition Policy Date: May 27, 2015
Read article More on this topic More by this author

Blog Post

Jérémie Cohen-Setton

The American poverty traps

What’s at stake: Recent research by the Equality of Opportunity Project, a venture led by Raj Chetty, Nathaniel Hendren, Patrick Kline and Emmanuel Saez, is already having an impact on shaping the core issues of the next US presidential election where candidates need to address the question of American poverty traps.

By: Jérémie Cohen-Setton Topic: Global Economics & Governance Date: May 6, 2015
Read article Download PDF More on this topic

Policy Contribution

Poor and under pressure: the social impact of Europe's fiscal consolidation

Poor and under pressure: the social impact of Europe's fiscal consolidation

This Policy Contribution evaluates social indicators that can have a bearing on poverty, looks at the fiscal consolidation strategies of EU member states and assesses the possible links between fiscal consolidation and social developments.

By: Zsolt Darvas and Olga Tschekassin Topic: European Macroeconomics & Governance Date: March 31, 2015
Load more posts