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Understanding unemployment

Layard, Richard (1990) Understanding unemployment. CEP Discussion Papers, CEPDP0004. Centre for Economic Performance, London School of Economics and Political Science, London, UK.

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Identification Number: CEPDP0004

Abstract

This lecture provides a general framework for analysing unemployment. For inflation to be stable, there must be sufficient unemployment to prevent ''target real wages'' exceeding ''feasible real wages''. Target real wages depend on bargaining systems, benefit systems, labour market policies and mismatch. This framework explains inter-country differences in unemployment rates and British time series. The Restart Programme has helped in a major way to reduce British unemployment. Long-term unemployment is an almost total economic waste since it does little to reduce target real wages. It also imposes major external costs on British taxpayers since long-term unemployed people are so unlikely to become re-employed. Britain should adopt the Swedish ''employment principle'' and the labour market policies that go with it.

Item Type: Monograph (Report)
Official URL: http://cep.lse.ac.uk
Additional Information: © 2009 The Authors
Subjects: H Social Sciences > HC Economic History and Conditions
Sets: Departments > Economics
Research centres and groups > Centre for Economic Performance (CEP)
Series: Working Papers > CEP Discussion Papers
Date Deposited: 28 Feb 2013 10:30
Last Modified: 13 Aug 2013 10:35
URI: http://eprints.lse.ac.uk/id/eprint/48883

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