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The Great Recession in the UK Labour Market: A Transatlantic Perspective

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  • Elsby, Michael W.L.
  • Smith, Jennifer C.

Abstract

The increase in unemployment in the United Kingdom that accompanied the Great Recession has been conspicuous by its moderation. The rise in joblessness is dwarfed by the recent experience of the United States, by past recessionary episodes in the UK and by the contraction in GDP in the UK. Increased rates of job loss have played a dominant role in shaping the rise in British unemployment. Unemployment duration has not increased to the levels seen in previous recessions, in contrast to the US where duration substantially exceeds previous peaks. Looking forward, the UK labour market appears to have adjusted fully to the shocks that prompted the recession. Signs of reductions in match efficiency witnessed recently in the US are not mirrored in the UK. In contrast, while long-term unemployment currently remains well below historical levels, recent estimates of job finding rates suggest that it has the potential to rise much further. Thus, a timely recovery in aggregate demand will play an important role in averting persistently high unemployment in the future.

Suggested Citation

  • Elsby, Michael W.L. & Smith, Jennifer C., 2010. "The Great Recession in the UK Labour Market: A Transatlantic Perspective," National Institute Economic Review, National Institute of Economic and Social Research, vol. 214, pages 26-37, October.
    • Handle: RePEc:cup:nierev:v:214:y:2010:i::p:r26-r37_15
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    References listed on IDEAS

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    1. Layard, Richard & Nickell, Stephen & Jackman, Richard, 2005. "Unemployment: Macroeconomic Performance and the Labour Market," OUP Catalogue, Oxford University Press, number 9780199279173.
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    Cited by:

    1. Fontaine, Idriss & Gálvez-Iniesta, Ismael & Gomes, Pedro & Vila-Martin, Diego, 2020. "Labour market flows: Accounting for the public sector," Labour Economics, Elsevier, vol. 62(C).
    2. Nitika Bagaria & Dawn Holland & John Van Reenen, 2012. "Fiscal Consolidation During a Depression," National Institute Economic Review, National Institute of Economic and Social Research, vol. 221(1), pages 42-54, July.
    3. Carrillo-Tudela, Carlos & Hobijn, Bart & She, Powen & Visschers, Ludo, 2016. "The extent and cyclicality of career changes: Evidence for the U.K," European Economic Review, Elsevier, vol. 84(C), pages 18-41.
    4. Carlos Carrillo-Tudela & Bart Hobijn & Powen She & Ludo Visschers, 2014. "The Extent and Cyclicality of Career Changes: Evidence for the UK (first version)," Edinburgh School of Economics Discussion Paper Series 246, Edinburgh School of Economics, University of Edinburgh.
    5. Michael W. L. Elsby & Jennifer C. Smith & Jonathan Wadsworth, 2011. "The role of worker flows in the dynamics and distribution of UK unemployment," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 27(2), pages 338-363.
    6. Tindara Addabbo & Paula Rodríguez-Modroño & Lina Gálvez-Muñoz, 2013. "Gender and the Great Recession: Changes in labour supply in Spain," Department of Economics (DEMB) 0010, University of Modena and Reggio Emilia, Department of Economics "Marco Biagi".
    7. repec:mod:depeco:0010 is not listed on IDEAS
    8. Michael W. L. Elsby & Jennifer C. Smith & Jonathan Wadsworth, 2021. "Population growth, immigration and labour market dynamics," CEP Discussion Papers dp1814, Centre for Economic Performance, LSE.
    9. Brunello, Giorgio & Rocco, Lorenzo, 2015. "The Labour Market Effects of Academic and Vocational Education over the Life Cycle: Evidence from Two British Cohorts," IZA Discussion Papers 9275, Institute of Labor Economics (IZA).
    10. Pedro Gomes, 2015. "The importance of frequency in estimating labour market transition rates," IZA Journal of Labor Economics, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-10, December.
    11. Reuben Ellul, 2018. "Forecasting unemployment rates in Malta: A labour market flows approach," CBM Working Papers WP/03/2018, Central Bank of Malta.
    12. Carillo-Tudela, Carlos & Hobijn, Bart & She, Powen & Visschers, Ludo, 2014. "The Extent and Cyclicality of Career Changes: Evidence for the UK," 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon TN 2015-40, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    13. Robert Dixon & Guay Lim, 2016. "Modelling the dynamics of regional employment–population ratios and their commonality," Urban Studies, Urban Studies Journal Limited, vol. 53(2), pages 338-354, February.
    14. Carrillo-Tudela, Carlos & Graber, Michael & Waelde, Klaus, 2018. "Unemployment and vacancy dynamics with imperfect financial markets," Labour Economics, Elsevier, vol. 50(C), pages 128-143.
    15. Carrillo-Tudela, Carlos & Hobijn, Bart & She, Powen & Visschers, Ludo, 2015. "The Extent and Cyclicality of Career Changes: Evidence for the UK," 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon TN 2015-52, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    16. Ilias Georgakopoulos, 2019. "Income and wealth inequality in Malta: evidence from micro data," CBM Working Papers WP/03/2019, Central Bank of Malta.

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    More about this item

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J - Labor and Demographic Economics

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