Long-term Unemployment and the Wage Equation in Britain, 1925-1939
This paper shows that addition of a long-term unemployment variable substantially improves estimates of the wage equation in interwar Britain. Long-term unemployment did not have a damping effect on wage growth whereas short-term unemployment did reduce wage inflation. The results imply that, during the 1930s, the nonaccelerating inflation rate of unemployment rose as the composition of the stock of unemployed altered. Both insider-outsider arguments and employer perceptions of low productivity characteristics among the long-term unemployed are likely explanations for the results in the paper. Copyright 1989 by The London School of Economics and Political Science.
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Volume (Year): 56 (1989)
Issue (Month): 222 (May)
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