What are some reasons why the unemployment rate is typically lower in the United States as compared to Canada and some Western European countries?
What will be an ideal response?
Workers in Western Europe and Canada are eligible for unemployment insurance benefits for about twice as long as in the United States. In addition, some of the social insurance programs in these countries are more generous as compared to the United States. This makes the opportunity cost of job search lower in Canada and Western Europe, so unemployed workers in those regions will search longer for jobs. This increase in the duration of unemployment raises the unemployment rate in these countries, relative to the United States.
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