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Ten Years of Mrs. T

In: NBER Macroeconomics Annual 1989, Volume 4

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  • Charles Bean
  • James Symons

Abstract

We argue that the 1970s were characterized by attempts to maintain a cooperative, low unemployment equilibrium in the face of considerable union power, through use of incomes policies and neo-corporatist machinery. The 1980s saw a shift away from this, towards direct measures to limit union power. This, together with the adoption of tight macroeconomic policies, explains the initial rise in unemployment. The reduction in union power also helps to explain the acceleration in productivity growth. The craft nature of much of the British union movement has led to a multiplication of bargaining units wihin firms. Bargaining in isolation a union can perceive overmanning and other restrictive practices as being in its intrests, resulting in low wages and productivity. A fall in union power results in a reduction in these inefficiencies and leads not only to a rise in productivity but also in wages.

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This chapter was published in:

  • Olivier J. Blanchard & Stanley Fischer, 1989. "NBER Macroeconomics Annual 1989, Volume 4," NBER Books, National Bureau of Economic Research, Inc, number blan89-1.
    This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 10962.

    Handle: RePEc:nbr:nberch:10962

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    References

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    1. Newell, A. & Symons, J., 1989. "The Passing Of The Golden Age," Papers, London School of Economics - Centre for Labour Economics 347, London School of Economics - Centre for Labour Economics.
    2. S.J. Prais & Karin Wagner, 1988. "Productivity and Management: the Training of Foremen in Britain and Germany," National Institute Economic Review, National Institute of Economic and Social Research, National Institute of Economic and Social Research, vol. 123(1), pages 34-46, February.
    3. Bean, C. & Gavosto, A., 1989. "Outsiders, Capacity Shortages And Unemployment In The United Kingdom," Papers, London School of Economics - Centre for Labour Economics 332, London School of Economics - Centre for Labour Economics.
    4. Jackman, R & Roper, S, 1987. "Structural Unemployment," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 49(1), pages 9-36, February.
    5. William H. Buiter & Marcus Miller, 1981. "The Thatcher Experiment: The First Two Years," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 12(2), pages 315-380.
    6. repec:sae:niesru:v:97:y:1981:i:1:p:83-83 is not listed on IDEAS
    7. Willem H. Buiter & Marcus Miller, 1983. "Changing the Rules: Economic Consequences of the Thatcher Regime," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 14(2), pages 305-380.
    8. Ashton, Paul & Minford, Patrick, 1988. "The Poverty Trap and the Laffer Curve: What Can the GHS Tell Us?," CEPR Discussion Papers, C.E.P.R. Discussion Papers 275, C.E.P.R. Discussion Papers.
    9. Robert E. Hall, 1986. "Market Structure and Macroeconomic Fluctuations," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 17(2), pages 285-338.
    10. Gottfries, Nils & Horn, Henrik, 1987. "Wage Formation and the Persistence of Unemployment," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 97(388), pages 877-84, December.
    11. Wadhwani, Sushil & Wall, Martin, 1986. "The UK Capital Stock--New Estimates of Premature Scrapping," Oxford Review of Economic Policy, Oxford University Press, Oxford University Press, vol. 2(3), pages 44-55, Autumn.
    12. Oswald, Andrew J & Turnbull, Peter J, 1985. "Pay and Employment Determination in Britain: What Are Labour," Oxford Review of Economic Policy, Oxford University Press, Oxford University Press, vol. 1(2), pages 80-97, Summer.
    13. Olivier J. Blanchard & Lawrence H. Summers, 1986. "Hysteresis and the European Unemployment Problem," Working papers, Massachusetts Institute of Technology (MIT), Department of Economics 427, Massachusetts Institute of Technology (MIT), Department of Economics.
    14. Lindbeck, Assar & Snower, Dennis J., 1987. "Cooperation, Harassment, and Involuntary Unemployment: An Insider-Outsider Approach," CEPR Discussion Papers, C.E.P.R. Discussion Papers 196, C.E.P.R. Discussion Papers.
    15. Newell, A. & Symons, J. S. V., 1987. "Corporatism, laissez-faire and the rise in unemployment," European Economic Review, Elsevier, Elsevier, vol. 31(3), pages 567-601, April.
    16. repec:sae:niesru:v:126:y::i:1:p:57-70 is not listed on IDEAS
    17. Blanchard, Olivier Jean & Kiyotaki, Nobuhiro, 1987. "Monopolistic Competition and the Effects of Aggregate Demand," American Economic Review, American Economic Association, American Economic Association, vol. 77(4), pages 647-66, September.
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    Cited by:
    1. Ian Small, 1997. "The cyclicality of Mark-ups and Profit Margins: Some Evidence for Manufacturing and Services," Bank of England working papers, Bank of England 72, Bank of England.
    2. Nelson, Edward, 2001. "What Does the UK's Monetary Policy and Inflation Experience Tell Us About the Transmission Mechanism?," CEPR Discussion Papers, C.E.P.R. Discussion Papers 3047, C.E.P.R. Discussion Papers.
    3. Nelson, Edward & Nikolov, Kalin, 2003. "UK inflation in the 1970s and 1980s: the role of output gap mismeasurement," Journal of Economics and Business, Elsevier, Elsevier, vol. 55(4), pages 353-370.
    4. Manfred Keil & Andrew Newell, 1993. "Internal migration and unemployment in Germany: An anglo-irish perspective," Review of World Economics (Weltwirtschaftliches Archiv), Springer, Springer, vol. 129(3), pages 514-536, September.
    5. Lynde, Catherine & Richmond, J., 1998. "Productivity and efficiency in the UK: a time series application of DEA," Economic Modelling, Elsevier, Elsevier, vol. 16(1), pages 105-122, January.
    6. Nicholas Crafts & Mary O'Mahony, 2001. "A perspective on UK productivity performance," Fiscal Studies, Institute for Fiscal Studies, Institute for Fiscal Studies, vol. 22(3), pages 271-306, September.
    7. Manfred Keil & Louis Pantuosco, 1998. "Canadian and US Unemployment Rates: A Comparison Based on Regional Data," Canadian Public Policy, University of Toronto Press, vol. 24(s1), pages 38-55, February.
    8. Erik Britton & Jens D J Larsen & Ian Small, 2000. "Imperfect competition and the dynamics of mark-ups," Bank of England working papers, Bank of England 110, Bank of England.
    9. Paul Beaudry & Mustafa Caglayan & Fabio Schiantarelli, 1996. "Monetary Instability, the Predictability of Prices and the Allocation of Investment: An Empirical Investigation Using UK Panel Data," Boston College Working Papers in Economics, Boston College Department of Economics 312., Boston College Department of Economics.
    10. Gianluigi Pelloni & Wolfgang Polasek, 2003. "Macroeconomic Effects of Sectoral Shocks in Germany, The U.K. and, The U.S.: A VAR-GARCH-M Approach," Computational Economics, Society for Computational Economics, Society for Computational Economics, vol. 21(1_2), pages 65-85, 02.
    11. Mills, Terence C. & Pelloni, Gianluigi & Zervoyianni, Athina, 1996. "Cyclical unemployment and sectoral shifts: Further tests of the Lilien hypothesis for the UK," Economics Letters, Elsevier, Elsevier, vol. 52(1), pages 55-60, July.
    12. Kevin Denny, 1997. "Productivity and trade unions in British manufacturing industry 1973-85," Applied Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 29(10), pages 1403-1409.

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