The main cause of Europe's deep fall - the losses of inclusion, job satisfaction and wage growth - is the devastating slowdown of productivity that began in the late 1990s and struck large swaths of the continent. It holds down the growth of wages rates, and it depresses employment.

Economists of a classical bent lay a large part of the decline of employment, and thus lagging output, to a contraction of labour supply.

Disciples of Keynes, who focus on aggregate demand, view any increase in household wealth as raising employment because they say it adds to consumer demand.

Edmund Phelps Quotes