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The effects of increased labour market flexibility in the United Kingdom: theory and practice

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  • Stephen P Millard

Abstract

This paper uses the increase in labour market flexibility in the United Kingdom in recent years to see how well the predictions of a couple of recently developed labour market models can account for data. The two models examined are an 'equilibrium business cycle' model of the labour market and a 'search' model. The models do well in predicting the fall in the level and persistence of the unemployment rate and average hours since about 1985 as well as the step increase in consumption and output that seems to have occured. Conversely, unemployment incidence has fallen and the volatilities of output, consumption, employment and unemployment have all increased in the most recent cycle contrary to the predictions of the models.

Suggested Citation

  • Stephen P Millard, 2000. "The effects of increased labour market flexibility in the United Kingdom: theory and practice," Bank of England working papers 109, Bank of England.
    • Handle: RePEc:boe:boeewp:109
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    File URL: http://www.bankofengland.co.uk/archive/Documents/historicpubs/workingpapers/2000/wp109.pdf
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    References listed on IDEAS

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    Cited by:

    1. Michelle Gilmartin & David Learmouth & J Kim Swales & Peter McGregor & Karen Turner, 2013. "Regional Policy Spillovers: The National Impact of Demand-Side Policy in an Interregional Model of the UK Economy," Environment and Planning A, , vol. 45(4), pages 814-834, April.
    2. Athanasios Tagkalakis, 2006. "The effects of macroeconomic policy shocks on the UK labour market," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 11(3), pages 229-244.
    3. Vincenzo Cassino & Richard Thornton, 2002. "Do changes in structural factors explain movements in the equilibrium rate of unemployment?," Bank of England working papers 153, Bank of England.
    4. Beatriz Armendariz, 2009. "Microfinance for Self-Employment Activities in the European Urban Areas: Contrasting Crédal in Belgium and Adie in France," Working Papers CEB 09-041.RS, ULB -- Universite Libre de Bruxelles.
    5. John Turner (ed.), 2001. "Pay at Risk: Compensation and Employment Risk in the United States and Canada," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number par, November.

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