This thesis aims to study the divergence between unemployment rates in Europe. First, the previous literature was reviewed and used as background work for the thesis. Then the disparity between unemployment rates was analyzed by investigating the differences in economic and employment flexibility across European countries. Indices and indicators relating to economic and employment flexibility were analyzed through time-series or comparative analysis, depending on the need. The results of the analysis were discussed, concluding that divergence between unemployment rates would always exist and lower unemployment rates do not always reflect higher welfare. Hence, the focus of European policymakers should be on increasing employment welfare even if it increases the gap between unemployment rates in Europe.