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Unemployment and the UK labour market before, during and after the Golden Age

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  • HATTON, TIMOTHY J.
  • BOYER, GEORGE R.

Abstract

During the ‘golden age’ of the 1950s and 1960s unemployment in Britain averaged 2 per cent. This was far lower than ever before or since and a number of hypotheses have been put forward to account for this unique period in labour market history. But there has been little attempt to isolate precisely how the determinants of wage setting and unemployment differed before, during and after the golden age. We estimate a two-equation model over the whole period from 1872 to 1999 using a newly constructed set of long-run labour market data. We find that the structure of real wage setting was different in the golden age, consistent with notions about the postwar consensus, but it did not result in wages that were significantly lower relative to productivity than during other eras. Rapid growth in productivity and world trade together with low interest rates did keep unemployment lower during the golden age than after the 1970s. But the key difference between the golden age and the periods before and after was shifts in labour demand that are not accounted for by any of the variables that are usually thought to determine the equilibrium unemployment rate.

Suggested Citation

  • Hatton, Timothy J. & Boyer, George R., 2005. "Unemployment and the UK labour market before, during and after the Golden Age," European Review of Economic History, Cambridge University Press, vol. 9(1), pages 35-60, April.
    • Handle: RePEc:cup:ereveh:v:9:y:2005:i:01:p:35-60_00
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    Cited by:

    1. Molinder, Jakob, 2019. "Why Was Unemployment so Low in Postwar Sweden? An Analysis with New Unemployment Data by Manufacturing Industry, 1935-1948," Lund Papers in Economic History 201, Lund University, Department of Economic History.
    2. Sambit Bhattacharyya & Jeffrey G. Williamson, 2011. "Commodity Price Shocks And The Australian Economy Since Federation," Australian Economic History Review, Economic History Society of Australia and New Zealand, vol. 51(2), pages 150-177, July.
    3. Eric Bengtsson & Engelbert Stockhammer, 2018. "Wages, income distribution and economic growth in Scandinavia," Working Papers PKWP1811, Post Keynesian Economics Society (PKES).
    4. Nicholas Crafts, 2021. "What can we learn from the United Kingdom’s post‐1945 economic reforms?," Economic Affairs, Wiley Blackwell, vol. 41(3), pages 354-376, October.
    5. Erik Bengtsson, 2014. "Labour's share in twentieth-century Sweden: a reinterpretation," Scandinavian Economic History Review, Taylor & Francis Journals, vol. 62(3), pages 290-314, November.

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