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Unemployment in Britain: a European success story

Pissarides, Christopher (2006) Unemployment in Britain: a European success story. In: Werding, Martin, (ed.) Structural Unemployment in Western Europe: Reasons and Remedies. CESifo seminar series. MIT Press, Cambridge, Mass., 209 - 236. ISBN 9780262232463

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Unemployment in Britain has fallen from high European-style levels to US levels. I argue that the key reasons are first the reform of monetary policy, in 1993 with the adoption of inflation targeting and in 1997 with the establishment of the independent Monetary Policy Committee, and second the decline of trade union power. I interpret the reform of monetary policy as an institutional change that reduced inflationary expectations in the face of falling unemployment. The decline of trade union power contributed to the control of wage inflation. The major continental economies failed to match UK performance because of institutional rigidities, despite low inflation expectations.

Item Type: Book Section
Official URL:
Additional Information: © 2006 MIT Press
Divisions: Centre for Economic Performance
Subjects: H Social Sciences > HC Economic History and Conditions
H Social Sciences > HN Social history and conditions. Social problems. Social reform
Date Deposited: 29 Feb 2008
Last Modified: 15 Sep 2023 09:18

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