IDEAS home Printed from https://ideas.repec.org/a/bla/buecrs/v60y2008i2p123-157.html
   My bibliography  Save this article

Structural Shifts In Uk Unemployment 1979–2005: The Twin Impacts Of Financial Deregulation And Computerization

Author

Listed:
  • Michelle C. Baddeley

Abstract

This paper analyses UK unemployment in the period 1979–2005. Structural breaks are identified endogenously and they coincide with key institutional changes associated with financial deregulation and computerization in the New Economy. A vector error correction model is estimated and it confirms that computerization and financial deregulation have had counteracting impacts on UK unemployment. The results are consistent with three hypotheses: technological advances associated with computerization have moderated inflationary struggles between firms and insiders by increasing total factor productivity; financial deregulation has generated financial fragility fostering rises in unemployment; financial deregulation and computerization together have been associated with shifts from manufacturing towards services, fostering structural unemployment.

Suggested Citation

  • Michelle C. Baddeley, 2008. "Structural Shifts In Uk Unemployment 1979–2005: The Twin Impacts Of Financial Deregulation And Computerization," Bulletin of Economic Research, Wiley Blackwell, vol. 60(2), pages 123-157, April.
    • Handle: RePEc:bla:buecrs:v:60:y:2008:i:2:p:123-157
    DOI: 10.1111/j.0307-3378.2008.00277.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.0307-3378.2008.00277.x
    Download Restriction: no
    File URL: https://libkey.io/10.1111/j.0307-3378.2008.00277.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Madsen, Jakob B, 1998. "General Equilibrium Macroeconomic Models of Unemployment: Can They Explain the Unemployment Path in the OECD?," Economic Journal, Royal Economic Society, vol. 108(448), pages 850-867, May.
    2. Ken Coutts & Andrew Glyn & Bob Rowthorn, 2007. "Structural change under New Labour," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 31(6), pages 845-861, November.
    3. Bean, Charles R, 1994. "European Unemployment: A Survey," Journal of Economic Literature, American Economic Association, vol. 32(2), pages 573-619, June.
    4. Philip Arestis & Iris Biefang-Frisancho Mariscal, 2000. "OECD unemployment: structural breaks and stationarity," Applied Economics, Taylor & Francis Journals, vol. 32(4), pages 399-403.
    5. Serena Ng & Pierre Perron, 2001. "LAG Length Selection and the Construction of Unit Root Tests with Good Size and Power," Econometrica, Econometric Society, vol. 69(6), pages 1519-1554, November.
    6. McGregor, Alan, 1978. "Unemployment Duration and Re-Employment Probability," Economic Journal, Royal Economic Society, vol. 88(352), pages 693-706, December.
    7. Blanchard, Olivier & Wolfers, Justin, 2000. "The Role of Shocks and Institutions in the Rise of European Unemployment: The Aggregate Evidence," Economic Journal, Royal Economic Society, vol. 110(462), pages 1-33, March.
    8. Karanassou, Marika & Snower, Dennis J, 1998. "How Labour Market Flexibility Affects Unemployment: Long-Term Implications of the Chain Reaction Theory," Economic Journal, Royal Economic Society, vol. 108(448), pages 832-849, May.
    9. Layard, Richard & Nickell, Stephen & Jackman, Richard, 2005. "Unemployment: Macroeconomic Performance and the Labour Market," OUP Catalogue, Oxford University Press, number 9780199279173.
    10. Perron, Pierre, 1997. "Further evidence on breaking trend functions in macroeconomic variables," Journal of Econometrics, Elsevier, vol. 80(2), pages 355-385, October.
    11. Danny Quah, 2002. "Technology Dissemination and Economic Growth: Some Lessons for the New Economy," CEP Discussion Papers dp0522, Centre for Economic Performance, LSE.
    12. Stephen Nickell & Luca Nunziata & Wolfgang Ochel, 2005. "Unemployment in the OECD Since the 1960s. What Do We Know?," Economic Journal, Royal Economic Society, vol. 115(500), pages 1-27, January.
    13. Zivot, Eric & Andrews, Donald W K, 2002. "Further Evidence on the Great Crash, the Oil-Price Shock, and the Unit-Root Hypothesis," Journal of Business & Economic Statistics, American Statistical Association, vol. 20(1), pages 25-44, January.
    14. Giulia Faggio & Stephen Nickell, 2007. "Patterns of Work Across the OECD," Economic Journal, Royal Economic Society, vol. 117(521), pages 416-440, June.
    15. Constantinos Alexiou & Christos Pitelis, 2003. "On capital shortages and European unemployment: a panel data investigation," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 25(4), pages 613-640.
    16. Linda Low, 2000. "Economics of Information Technology and the Media," World Scientific Books, World Scientific Publishing Co. Pte. Ltd., number 4075, February.
    17. Banerjee, Anindya & Lumsdaine, Robin L & Stock, James H, 1992. "Recursive and Sequential Tests of the Unit-Root and Trend-Break Hypotheses: Theory and International Evidence," Journal of Business & Economic Statistics, American Statistical Association, vol. 10(3), pages 271-287, July.
    18. Griliches, Zvi, 1969. "Capital-Skill Complementarity," The Review of Economics and Statistics, MIT Press, vol. 51(4), pages 465-468, November.
    19. Assar Lindbeck & Dennis J. Snower, 2001. "Insiders versus Outsiders," Journal of Economic Perspectives, American Economic Association, vol. 15(1), pages 165-188, Winter.
    20. Rowthorn, Robert, 1999. "Unemployment, Wage Bargaining and Capital-Labour Substitution," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 23(4), pages 413-425, July.
    21. Perron, Pierre, 1989. "The Great Crash, the Oil Price Shock, and the Unit Root Hypothesis," Econometrica, Econometric Society, vol. 57(6), pages 1361-1401, November.
    22. E. Young Song, 2005. "Temporary Protection and Technology Choice under the Learning Curve," Review of International Economics, Wiley Blackwell, vol. 13(2), pages 391-396, May.
    23. Crafts, Nicholas, 1996. "Deindustrialisation and Economic Growth," Economic Journal, Royal Economic Society, vol. 106(434), pages 172-183, January.
    24. R. L. Hall & C. J. Hitch, 1939. "Price Theory And Business Behaviour," Oxford Economic Papers, Oxford University Press, vol. 0(1), pages 12-45.
    25. Davidson, Paul, 1998. "Post Keynesian Employment Analysis and the Macroeconomics of OECD Unemployment," Economic Journal, Royal Economic Society, vol. 108(448), pages 817-831, May.
    26. Lindbeck, Assar & Snower, Dennis J, 1986. "Wage Setting, Unemployment, and Insider-Outsider Relations," American Economic Review, American Economic Association, vol. 76(2), pages 235-239, May.
    27. Sarantis, Nicholas, 1993. "Distribution, Aggregate Demand and Unemployment in OECD Countries," Economic Journal, Royal Economic Society, vol. 103(417), pages 459-467, March.
    28. Jushan Bai & Pierre Perron, 2003. "Computation and analysis of multiple structural change models," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 18(1), pages 1-22.
    29. Rowthorn, Robert, 1995. "Capital Formation and Unemployment," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 11(1), pages 26-39, Spring.
    30. Phelps, Edmund S & Zoega, Gylfi, 1998. "Natural-Rate Theory and OECD Unemployment," Economic Journal, Royal Economic Society, vol. 108(448), pages 782-801, May.
    31. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-444, June.
    32. Nickell, Stephen, 1998. "Unemployment: Questions and Some Answers," Economic Journal, Royal Economic Society, vol. 108(448), pages 802-816, May.
    33. Paul Davidson, 2001. "If Markets are Efficient, Why Have There Been So Many International Financial Market Crises Since the 1970s?," Palgrave Macmillan Books, in: Philip Arestis & Michelle Baddeley & John McCombie (ed.), What Global Economic Crisis?, chapter 2, pages 12-34, Palgrave Macmillan.
    34. Philip Arestis & Michelle Baddeley & Malcolm Sawyer, 2007. "The Relationship Between Capital Stock, Unemployment And Wages In Nine Emu Countries," Bulletin of Economic Research, Wiley Blackwell, vol. 59(2), pages 125-148, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Feldmann, Horst, 2012. "Banking deregulation around the world, 1970s to 2000s: The impact on unemployment," International Review of Economics & Finance, Elsevier, vol. 24(C), pages 26-42.
    2. Kerstin Hotte & Melline Somers & Angelos Theodorakopoulos, 2022. "Technology and jobs: A systematic literature review," Papers 2204.01296, arXiv.org.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Marika Karanassou & Hector Sala & Dennis J. Snower, 2010. "Phillips Curves And Unemployment Dynamics: A Critique And A Holistic Perspective," Journal of Economic Surveys, Wiley Blackwell, vol. 24(1), pages 1-51, February.
    2. Engelbert Stockhammer, 2008. "Is The Nairu Theory A Monetarist, New Keynesian, Post Keynesian Or A Marxist Theory?," Metroeconomica, Wiley Blackwell, vol. 59(3), pages 479-510, July.
    3. Engelbert Stockhammer & Alexander Guschanski & Karsten Köhler, 2014. "Unemployment, capital accumulation and labour market institutions in the Great Recession," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 11(2), pages 182-194, September.
    4. García-Cintado, Alejandro & Romero-Ávila, Diego & Usabiaga, Carlos, 2015. "Can the hysteresis hypothesis in Spanish regional unemployment be beaten? New evidence from unit root tests with breaks," Economic Modelling, Elsevier, vol. 47(C), pages 244-252.
    5. David R. Howell, 2010. "Institutions, Aggregate Demand and Cross-Country Employment Performance: Alternative Theoretical Perspectives and the Evidence," Working Papers wp228, Political Economy Research Institute, University of Massachusetts at Amherst.
    6. Vasiliki Bozani, 2011. "NAIRU, Unemployment and Post Keynesian Economics," Working Papers 1104, University of Crete, Department of Economics.
    7. Giorgio Canarella & Rangan Gupta & Stephen M. Miller & Stephen K. Pollard, 2019. "Unemployment rate hysteresis and the great recession: exploring the metropolitan evidence," Empirical Economics, Springer, vol. 56(1), pages 61-79, January.
    8. Bruno Damásio & Diogo Martins, 2017. "Do Labour Market Reforms Pay Off? Unemployment and Capital Accumulation in Portugal," Working Papers Department of Economics 2017/01, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
    9. Diogo Martins & Bruno Damásio, 2020. "One Troika fits all? Job crash, pro-market structural reform and austerity-driven therapy in Portugal," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 47(3), pages 495-521, August.
    10. António Afonso & André Albuquerque, 2018. "Sovereign Credit Rating Mismatches," Notas Económicas, Faculty of Economics, University of Coimbra, issue 46, pages 49-70, July.
    11. Dionisio Ramirez & Gabriel Rodr¨ªguez, 2014. "Do Labor Reforms in Spain Have an Effect on the Equilibrium Unemployment Rate?," International Journal of Social Science Studies, Redfame publishing, vol. 2(1), pages 105-120, January.
    12. Kurmaş Akdoğan, 2017. "Unemployment hysteresis and structural change in Europe," Empirical Economics, Springer, vol. 53(4), pages 1415-1440, December.
    13. Matteo Lanzafame, 2010. "The nature of regional unemployment in Italy," Empirical Economics, Springer, vol. 39(3), pages 877-895, December.
    14. Ron Smith & Gylfi Zoega, 2004. "Global Shocks and Unemployment Adjustment," Economics wp24_smith, Department of Economics, Central bank of Iceland.
    15. Ramírez Carrera, Dionisio & Rodríguez, Gabriel, 2009. "Have European Unemployment Rates Converged?," Working Papers 2009-007, Banco Central de Reserva del Perú.
    16. Muysken, Joan & Weel, Bas ter, 1999. "Overeducation, Job Competition and Unemployment," Research Memorandum 030, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
    17. Diego Romero‐Ávila & Carlos Usabiaga, 2009. "The Unemployment Paradigms Revisited: A Comparative Analysis Of U.S. State And European Unemployment," Contemporary Economic Policy, Western Economic Association International, vol. 27(3), pages 321-334, July.
    18. John D. Levendis, 2018. "Time Series Econometrics," Springer Texts in Business and Economics, Springer, number 978-3-319-98282-3, June.
    19. Eckhard Hein & Engelbert Stockhammer, 2010. "Macroeconomic Policy Mix, Employment and Inflation in a Post-Keynesian Alternative to the New Consensus Model," Review of Political Economy, Taylor & Francis Journals, vol. 22(3), pages 317-354.
    20. Di Domenico, Lorenzo & Gahn, Santiago José & Romaniello, Davide, 2024. "Testing the Waters of Positive Hysteresis: The Effects of Autonomous Demand Shocks on Inflation, Accumulation, and Labor in the US Economy," Centro Sraffa Working Papers CSWP64, Centro di Ricerche e Documentazione "Piero Sraffa".

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:buecrs:v:60:y:2008:i:2:p:123-157. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0307-3378 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.