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Unemployment in the United Kingdom Since the War

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  • Martyn Andrews
  • Stephen Nickell

Abstract

In this paper, we first present a competitive macroeconomic model of an open economy which is suitable for estimation and contrast this with a non-competitive model. We then derive unemployment equations from the various models and estimate them over annual data from 1948–1979. We draw the following conclusions. (i) The competitive model of the labour market does not fit the facts. (ii) The non-competitive model generates an equation for the constant inflation rate of unemployment which reveals how, at certain times such as the mid 1970s, a combination of factors conspired to raise this level forcing the government into a deflationary stance to prevent inflation rising drastically. (iii) A number of factors have raised the level of unemployment in a secular fashion since the war, in particular the increase in the variation of relative prices, the increase in the benefit to income ratio, the introduction of employment protection legislation and the rise in the intersectoral shifts of the labour force.

Suggested Citation

  • Martyn Andrews & Stephen Nickell, 1982. "Unemployment in the United Kingdom Since the War," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 49(5), pages 731-759.
    • Handle: RePEc:oup:restud:v:49:y:1982:i:5:p:731-759.
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    File URL: http://hdl.handle.net/10.2307/2297187
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    Cited by:

    1. Stephen Nickell, 2006. "After The 1981 Budget: A Reply To Tim Congdon," Economic Affairs, Wiley Blackwell, vol. 26(4), pages 39-42, December.
    2. Vijlbrief, J.A., 1990. "The effects of unemployment insurance on the labour market," Serie Research Memoranda 0031, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
    3. Backhouse, Roger E. & Forder, James & Laskaridis, Christina, 2023. "The natural rate of unemployment and the NAIRU," European Economic Review, Elsevier, vol. 159(C).
    4. Junankar, Pramod N. (Raja) & Madsen, Jakob B., 2004. "Unemployment in the OECD: Models and Mysteries," IZA Discussion Papers 1168, Institute of Labor Economics (IZA).
    5. Waqqas Qayyum, 2007. "Causes of Youth Unemployment in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 46(4), pages 611-621.

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