Relative demand shifts and unemployment

Everywhere in the OECD, there has been a shift in relative labor demand away from low-skill workers towards high-skill workers. In the United States, this has led to a decrease in the relative wage of low-skill workers. In Europe, constraints on the relative wage of low-skill workers have led instead to an increase in their unemployment rate, and thus an overall increase in unemployment. As Krugman has put it, facing a tradeoff between letting low-skill workers go jobless or penniless, Europe has chosen the first, the US the second.