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Worker Insecurity and U.S. Macroeconomic Performance During the 1990s

Author

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  • Mark Setterfield

    (Trinity College, Department of Economics, 300 Summit Street, Hartford,CT 06106-3100, USAmark.setterfield@trincoll.edu)

Abstract

A model of macroeconomic outcomes is developed in which money and aggregate demand matter, inflation is the outcome of conflicting nominal income claims, and institutions create relatively enduring “conditional closures†in otherwise open macroeconomic processes. This model is used to hypothesize that U.S. macroeconomic performance during the late 1990s resulted from a combination of relaxed monetary policy and the consolidation of institutional changes in the U.S. labor market that, by the late 1990s, rendered workers' employment and income prospects insecure. Empirical results confirm that increased worker insecurity contributes to explaining U.S. inflation since 1973, and that by the 1990s, the inflation costs of any given rate of unemployment in the United States had been reduced. It is suggested that the supply side of the U.S. economy may now be capable of sustaining low unemployment and inflation outcomes, primarily as a result of labor market institutions that have “zapped†U.S. labor.

Suggested Citation

  • Mark Setterfield, 2005. "Worker Insecurity and U.S. Macroeconomic Performance During the 1990s," Review of Radical Political Economics, Union for Radical Political Economics, vol. 37(2), pages 155-177, June.
  • Handle: RePEc:sae:reorpe:v:37:y:2005:i:2:p:155-177
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    Citations

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    Cited by:

    1. Mark Setterfield, 2023. "Whatever Happened to the ‘Goodwin Pattern’? Profit Squeeze Dynamics in the Modern American Labour Market," Review of Political Economy, Taylor & Francis Journals, vol. 35(1), pages 263-286, January.
    2. Serrano, Franklin & Summa , Ricardo, 2015. "Distribution and Cost-Push inflation in Brazil under inflation targeting, 1999-2014," Centro Sraffa Working Papers CSWP14, Centro di Ricerche e Documentazione "Piero Sraffa".
    3. Peter Flaschel & Sigrid Luchtenberg & Hagen Kramer & Christian Proano & Mark Setterfield, 2021. "Contemporary Macroeconomic Outcomes: A Tragedy in Three Acts," Working Papers 2105, New School for Social Research, Department of Economics.
    4. Ricardo Summa & Julia Braga, 2020. "The (conflict-augmented) Phillips Curve is alive and well," Working Papers 0055, ASTRIL - Associazione Studi e Ricerche Interdisciplinari sul Lavoro.
    5. Ricardo Summa & Julia Braga, 2020. "Two routes back to the old Phillips curve: the amended mainstream model and the conflict augmented alternative," Bulletin of Political Economy, Bulletin of Political Economy, vol. 14(1), pages 81-115, June.
    6. Stamegna, Marco, 2022. "Induced innovation, the distributive cycle, and the changing pattern of labour productivity cyclicality: a SVAR analysis for the US economy," MPRA Paper 113855, University Library of Munich, Germany.
    7. Mark Setterfield, 2017. "Modern (American) Capitalism: A Three Act Tragedy," Working Papers 1722, New School for Social Research, Department of Economics.

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