Answer to Question 1
It is harder to fire workers in many European countries as compared to the United States. Firms are less likely to want to hire workers in these European countries and younger workers will have a harder time finding a job. Workers stay on the job longer in these European countries, even if the job is not a good match. Put differently, the lower rate of mobility makes it more likely that the European workers' skills and preferences will not match well with job characteristics. This will lower their productivity relative to the U.S. worker, who tends to have a higher rate of job mobility.
Workers in the United States tend to experience fewer long spells of unemployment than do European workers. This is in part due to unemployment insurance. Workers in the United States receive unemployment insurance for a shorter time and the payments are less compared to their European counterparts. They are employed for longer periods of time and tend to have higher skills and greater productivity as compared to European workers.
Answer to Question 2
A
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