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

Stephen Millard

Bank of England working papers from Bank of England

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.

Date: 2000-02
New Economics Papers: this item is included in nep-eec and nep-ltv
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Persistent link: https://EconPapers.repec.org/RePEc:boe:boeewp:109

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