Alternative Taxes on Labor in the European Union

Greater labor market participation is high on the political agenda in most member states of the european union (eu). Low participation and high unemployment are a waste of human potential and national product and one of the root causes of most prevailing social and economic inequality in the eu. Long-term unemployment (approximately half of total unemployment, against only 10 percent in the united states (us)), creates considerable political tensions. It is heavily concentrated among low-skilled workers. These workers tend to develop a state of ‘learned helplessness,’ as they lose their working habits and their motivation to work. Greater labor market participation is also important in the face of an aging population in most member states.