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What Have Two Decades of British Economic Reform Delivered?

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Author Info
David Card
Richard B. Freeman

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Abstract

Beginning in 1979 with the newly electted Thatcher Government and continuing under successive Conservative and Labour Governments, the United Kingdom has embarked on a two-decade-long experiment in economic reform. We present evidence that the reform process has succeeded in making the UK more market-friendly than its European competitors. In fact, by the 1990s Britain ranked near the top of the league tables for freedom of markets, in some cases even ahead of the United States. To evaluate the effects of these reforms we compare trends in macroeconomic outcomes in the UK relative to the US, Germany, and France. During the 1980s and 1990s Britain halted the relative declines in GDP per capita and labour productivity that had characterized earlier decades, and partially closed the gap in income per capita with France and Germany. These gains were mainly attributable to relative rises in employment and hours. Unlike its EU competitors, Britain was able to achieve high employment-population rates with rising real wages for workers. The case that the change in economic performance can be credited to market-oriented reforms is harder to prove. Nevertheless, based on our own macro-level analyses, and micro-level evidence from several companion studies, we conclude that economic reforms contributed to halting the nearly century-long trend in relative economic decline of the UK relative to its historic competitors, Germany and France.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 8801.

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Date of creation: Feb 2002
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Handle: RePEc:nbr:nberwo:8801

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  1. Fabio Schiantarelli, 2005. "Product Market Regulation and Macroeconomic Performance: A Review of Cross Country Evidence," Boston College Working Papers in Economics 623, Boston College Department of Economics, revised 04 Aug 2008. [Downloadable!]
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  2. Loayza, Norman V. & Oviedo, Ana Maria & Serven, Luis, 2005. "Regulation and macroeconomic performance," Policy Research Working Paper Series 3469, The World Bank. [Downloadable!]
  3. Susanto Basu & John G. Fernald & Nicholas Oulton & Sylaja Srinivasan, 2003. "The case of the missing productivity growth: or, does information technology explain why productivity accelerated in the United States but not the United Kingdom?," Working Paper Series WP-03-08, Federal Reserve Bank of Chicago. [Downloadable!]
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  5. Alex Bryson & P Willman, 2007. "Union Organization in Great Britain," CEP Discussion Papers dp0774, Centre for Economic Performance, LSE. [Downloadable!]
  6. Anderson, Kym & Lloyd, Peter & MacLaren, Donald, 2008. "Distortions to agricultural incentives in Australia since world war II," Policy Research Working Paper Series 4471, The World Bank. [Downloadable!]
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  7. Nauro F. Campos & Armando Castellar Pinheiro & Fabio Giambiagi & Maurício M. Moreira, 2002. "Does it Take a Lula to go to Davos? A Brief Overview of Brazilian Reforms, 1980-2000," William Davidson Institute Working Papers Series 2003-580, William Davidson Institute at the University of Michigan Stephen M. Ross Business School. [Downloadable!]
  8. Susanto Basu & John G. Fernald & Nicholas Oulton & Sylaja Srinivasan, 2003. "The Case of the Missing Productivity Growth: Or, Does Information Technology Explain why Productivity Accelerated in the US but not the UK?," NBER Working Papers 10010, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  9. Mary Gregory & Giovanni Russo, . "The Employment Impact of Differences in Dmand and Production," DEMPATEM Working Papers wp10, AIAS, Amsterdam Institute for Advanced Labour Studies, revised Feb 2004. [Downloadable!]
  10. Guido Schwerdt & Jarkko Turunen, 2007. "Changes in Human Capital: Implications for Productivity Growth in the Euro Area," Ifo Working Paper Series Ifo Working Paper No. 53, Ifo Institute for Economic Research at the University of Munich. [Downloadable!]
  11. Addison, John T. & Siebert, W. Stanley, 2002. "Changes in Collective Bargaining in the U.K," IZA Discussion Papers 562, Institute for the Study of Labor (IZA). [Downloadable!]
  12. Guido Schwerdt & Jarkko Turunen, 2009. "Labor Quality Growth in Germany," Ifo Working Paper Series Ifo Working Paper No. 77, Ifo Institute for Economic Research at the University of Munich. [Downloadable!]
  13. Venetia Bell & Pablo Burriel-Llombart & Jerry Jones, . "A quality-adjusted labour input series for the United Kingdom (1975-2002)," Bank of England working papers 280, Bank of England. [Downloadable!]
  14. Karl Aiginger, 2003. "A Three Tier Strategy for Successful European Countries in the Nineties," WIFO Working Papers 205, WIFO. [Downloadable!]
  15. Anthony Garratt & Gary Koop & Emi Mise & Shaun P Vahey, 2007. "Real-time Prediction with UK Monetary Aggregates in the Presence of Model Uncertainty," Birkbeck Working Papers in Economics and Finance 0714, Birkbeck, Department of Economics, Mathematics & Statistics. [Downloadable!]
    Other versions:
  16. Alan Hughes & Michael S Scott Morton, 2005. "ICT and productivity growth - the paradox resolved?," ESRC Centre for Business Research - Working Papers wp316, ESRC Centre for Business Research. [Downloadable!]
  17. Charlotta Groth & Soledad Nuñez & Sylaja Srinivasan, . "Productivity growth, adjustment costs and variable factor utilisation: the UK case," Bank of England working papers 295, Bank of England. [Downloadable!]
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