The rise in UK unemployment: The search for an explanation

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This paper suggests that the model used by Layard and Nickell to account for changes in unemployment is highly restrictive in that it imposes cross-equation constraints and neglects labour supply as a source of the increase in unemployment. A less restrictive model, which circumvents some of the problems encountered in the Layard-Nickell approach, is suggested as a tool to account for an unemployment path. Dynamic simulations with the model suggest that labour supply persistence, increased mark-up of prices over wages and low GDP growth have, in particular, contributed to the UK unemployment increase from 1967 to 1983.

Original languageEnglish
Pages (from-to)251-265
Number of pages15
JournalInternational Review of Applied Economics
Issue number3
Publication statusPublished - 1 Jan 1994


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