The effects of macroeconomic policy shocks on the UK labour market

Athanasios Tagkalakis

International Journal of Finance & Economics, 2006, vol. 11, issue 3, 229-244

Abstract: This paper discusses the dynamic response of employment, average hours, and real wages to macroeconomic policy shocks in the UK in the period 1970 Q1-2003 Q1. Following a monetary policy shock the adjustment of labour input is primarily along the extensive margin. However, there is also significant adjustment along the intensive margin 1 year after the shock. A government spending shock leads to a fall in employment and hours, whereas real wages rise. This is attributed to the wage bill component of government consumption. Copyright © 2006 John Wiley & Sons, Ltd.

Date: 2006
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DOI: 10.1002/ijfe.295

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