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The more far-reaching option is to introduce a so-called harmonised rate of tax relief of about 30% on pension contributions.
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But many countries not least Britain and Ireland say that any attempt to harmonise rates would undermine their competitiveness and lead to an eventual rounding-up of tax.
Section 5.3 discusses dynamic results in relation to the UB recipiency rate and the harmonised unemployment rate.
Two different measures of the unemployment rate are used: i) UB recipiency rate (ratio of UB recipients to the labour force); ii) the harmonised unemployment rate (ratio of unemployed jobseekers to the labour force).
To ensure cross-country comparability, throughout this paper, we use Eurostat's harmonised unemployment rate for the euro area countries and the aggregate.
The impact of STW on the output elasticity of unemployment tends to be considerably more positive when controlling for the endogeneity of STW and when using the harmonised unemployment rate as the dependent variable.
While unemployment has subsequently fallen back in the United States from its high of over 10% in 2010 to under 7% at the end of 2013, and in Japan too, it has continued to rise in the European Union: the average EU28 harmonised unemployment rate rose from under 7% in early 2008 to 10.7% at the end of 2013.
The unemployment rate is currently around 11%. Figure 2 Trend in harmonised unemployment rates in Ireland, 1980-2013.
It goes without saying that an unemployment rate around 4% would be regarded as a miracle outcome in other European countries: at the end of 2013, for example, the lowest unemployment rate in the EU28 was 4.9% in Austria. Figure 5 Trend in harmonised unemployment rates in Switzerland, 1970-2013.
The "pact for competitiveness" (now the "pact for the euro") that Mrs Merkel and France's Nicolas Sarkozy are promoting, for instance, includes the idea of harmonising corporate-tax bases, surely a step towards harmonised tax rates.
Figure 3 Trend in harmonised unemployment rates in Finland, 1970-2013.
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