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Unemployment: A Problem of Policy: Analysis of British Experience and Prospects (National Institute of Economic & Social Research Economic & Social Studies)

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The high level of unemployment in Britain in the 1980s led many people to believe that it would continue indefinitely, and many arguments were advanced to explain it. After a preliminary examination of the statistics of employment and unemployment in Britain, this book exposes the major factors determining their trends as a basis for considering the likely developments and policy options. The study covers most of the explanations found in academic debate as well as in popular belief, drawing on a wide range of empirical research, including systematic international comparisons as well as case studies of particular interest. The analysis is carried out under four main headings: structural change; the wage question; macroeconomic policy; and the international dimension. Innovation and structural changes have a powerful influence on the pattern and volume of employment, and particular attention is paid to the effects of information technology, to the persistence of regional disparities in unemployment, and to changing patterns in the provision of jobs. Of the many links between wages and employment, two have been especially prominent.  First, that unemployment is caused by real wages being too high; and second, that the problem lies in the tendency for nominal wages to rise too fast. Both theories are explored, and detailed attention is paid to policy prescriptions, including wage subsidies, profit sharing and incomes policy. Macroeconomic policy has become a matter of acute controversy. Taking a preliminary assumption of a close economy, the conclusion is reached that demand management remains effective, and that it was rather a change in the objectives of policy than any ineffectiveness of demand management which kept unemployment high in the 1980s. There follows an analysis of the situations in which the international dimension may help or hinder domestic employment policy, with special reference to the European Community. The book concludes with a consideration of the practicability of the different policies which emerge.

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