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Unemployment dynamics in Britain

Author

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  • Simon Burgess
  • Hélène Turon

Abstract

We examine the inter-related dynamics of the unemployment flows and stock. Our model allows them to be linked through the standard accounting identity, but also through behavioural relationships. We find that, for the UK, the bulk of the correlation between duration and the unemployment stock arises from the dependence of duration on unemployment, taking careful account of the inter-temporal identity. Outflow shocks have contributed little to the evolution of unemployment since the late 1960s. Given that the correlation of duration and unemployment arises from the behavioural relationship, we show that unemployment dynamics arise mostly from shocks to the inflow. Copyright 2005 Royal Economic Society.

Suggested Citation

  • Simon Burgess & Hélène Turon, 2005. "Unemployment dynamics in Britain," Economic Journal, Royal Economic Society, vol. 115(503), pages 423-448, April.
    • Handle: RePEc:ecj:econjl:v:115:y:2005:i:503:p:423-448
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    Cited by:

    1. Ponomareva, Natalia & Sheen, Jeffrey, 2013. "Australian labor market dynamics across the ages," Economic Modelling, Elsevier, vol. 35(C), pages 453-463.
    2. Jennifer C. Smith, 2011. "The Ins and Outs of UK Unemployment," Economic Journal, Royal Economic Society, vol. 121(552), pages 402-444, May.
    3. Richard D. Barwell & Mark E. Schweitzer, 2005. "The incidence of nominal and real wage rigidities in Great Britain: 1978–1998," Working Papers (Old Series) 0508, Federal Reserve Bank of Cleveland.
    4. 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.
    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. Swati Dhingra & Fjolla Kondirolli, 2023. "Jobless and Stuck: Youth Unemployment and COVID-19 in India," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 71(3), pages 580-610, September.
    7. Barbara Sadaba & Sunčica Vujič & Sofia Maier, 2020. "Cyclicality of Schooling: New Evidence from Unobserved Components Models," Staff Working Papers 20-38, Bank of Canada.
    8. George O. Tasie, 2017. "The Symbiosis between Entrepreneurship Formation and Employment Creation: A Strategy for Job Opportunities in Kurdistan Region," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 7(3), pages 33-46, March.
    9. Robert Dixon & John Freebairn & Guay Lim, 2007. "Time-varying equilibrium rates of unemployment: an analysis with Australian data," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 10(4), pages 205-225.
    10. Gábor Pintér, 2019. "House Prices and Job Losses," The Economic Journal, Royal Economic Society, vol. 129(618), pages 991-1013.
    11. G. C. Lim & Robert Dixon & Jan C. Ours, 2021. "Beyond Okun’s law: output growth and labor market flows," Empirical Economics, Springer, vol. 60(3), pages 1387-1409, March.
    12. 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.
    13. Marian Dinga, 2008. "The Impact of Territorially Concentraced FDI on Local Labor Markets: Evidence from the Czech Republic," CERGE-EI Working Papers wp348, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    14. Carl Singleton, 2018. "Long‐Term Unemployment and the Great Recession: Evidence from UK Stocks and Flows," Scottish Journal of Political Economy, Scottish Economic Society, vol. 65(2), pages 105-126, May.
    15. Gomes, Pedro, 2012. "Labour market flows: Facts from the United Kingdom," Labour Economics, Elsevier, vol. 19(2), pages 165-175.
    16. Michal Franta, 2008. "Time Aggregation Bias in Discrete Time Models of Aggregate Duration Data," Working Papers 2008/10, Czech National Bank.
    17. Andriopoulou Eirini & Karakitsios Alexandros, 2022. "Unemployment transitions and the role of minimum wage: From pre-crisis to crisis and recovery," IZA Journal of Labor Policy, Sciendo & Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 12(1), pages 1-26, January.
    18. Burgess, Simon & Turon, Hélène, 2010. "Worker flows, job flows and unemployment in a matching model," European Economic Review, Elsevier, vol. 54(3), pages 393-408, April.
    19. Simonetta Longhi, 2011. "On-The-Job Search: Amount, Regional, And Cyclical Variation. Evidence From Great Britain," ERSA conference papers ersa10p294, European Regional Science Association.
    20. Dinga, Marián & Münich, Daniel, 2010. "The impact of territorially concentrated FDI on local labor markets: Evidence from the Czech Republic," Labour Economics, Elsevier, vol. 17(2), pages 354-367, April.
    21. Lin, Ching-Yang & Miyamoto, Hiroaki, 2012. "Gross worker flows and unemployment dynamics in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 26(1), pages 44-61.
    22. Julie L. Hotchkiss & John C. Robertson, 2006. "Asymmetric labor force participation decisions over the business cycle: evidence from U.S. microdata," FRB Atlanta Working Paper 2006-08, Federal Reserve Bank of Atlanta.
    23. Chew Lian Chua & Robert Dixon & G. C. Lim, 2007. "What Drives Worker Flows?," Melbourne Institute Working Paper Series wp2007n34, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    24. Arranz, José M. & García-Serrano, Carlos, 2020. "Does unemployment benefit duration affect inflows into unemployment? The impact of a law change for older workers," The Journal of the Economics of Ageing, Elsevier, vol. 17(C).
    25. Robert Dixon, 2007. "Common Cycles in Labour Market Separation Rates for Australian States," Department of Economics - Working Papers Series 991, The University of Melbourne.

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