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Unemployment dynamics in Britain

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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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    Citations

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    Cited by:

    1. Gomes, Pedro, 2009. "Labour market flows: facts from the United Kingdom," Bank of England working papers 367, Bank of England.
    2. Gomes, Pedro, 2012. "Labour market flows: Facts from the United Kingdom," Labour Economics, Elsevier, vol. 19(2), pages 165-175.
    3. Carl Singleton, 2016. "Long-term unemployment and the Great Recession: Evidence from UK stocks and flows," ESE Discussion Papers 273, Edinburgh School of Economics, University of Edinburgh.
    4. Michal Franta, 2008. "Time Aggregation Bias in Discrete Time Models of Aggregate Duration Data," Working Papers 2008/10, Czech National Bank, Research Department.
    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, vol. 27(2), pages 338-363.
    6. Richard D. Barwell & Mark E. Schweitzer, 2005. "The incidence of nominal and real wage rigidities in Great Britain: 1978–1998," Working Paper 0508, Federal Reserve Bank of Cleveland.
    7. Simonetta Longhi, 2011. "On-The-Job Search: Amount, Regional, And Cyclical Variation. Evidence From Great Britain," ERSA conference papers ersa10p294, European Regional Science Association.
    8. 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.
    9. 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.
    10. 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.
    11. 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.
    12. 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, December.
    13. Robert Dixon, 2007. "Common Cycles in Labour Market Separation Rates for Australian States," Department of Economics - Working Papers Series 991, The University of Melbourne.
    14. Gabor Pinter, 2015. "House Prices and Job Losses," Discussion Papers 1507, Centre for Macroeconomics (CFM).
    15. 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.

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