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The Incidence of Increased Unemployment in the Group of Seven, 1970-1994


  • Edmund S. Phelps
  • Gylfi Zoega


This paper looks at changes in the distribution of unemployment across education groups in Canada, France, Germany, Italy, the UK and the US. The rate of unemployment among the less educated is higher than among those with more education in all the countries, with the exception of Italy. Moreover, there has been a marked increase in their relative unemployment rates since 1970. This rise in relative unemployment is correlated with a rise in a measure of welfare-state spending as a ratio to GDP, and a fall in the share of manufacturing in total civilian employment. We fin that the rise in relative manufacturing productivity may be an important causal variable. Finally, the relative size of the education groups does not appear to influence significantly the rate of unemployment in each group. This suggests that an educational upgrading of the labour force may reduce overall unemployment.

Suggested Citation

  • Edmund S. Phelps & Gylfi Zoega, 1996. "The Incidence of Increased Unemployment in the Group of Seven, 1970-1994," Archive Discussion Papers 9621, Birkbeck, Department of Economics, Mathematics & Statistics.
  • Handle: RePEc:bbk:bbkewp:9621

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    Cited by:

    1. Dennis J. Snower, 1998. "Causes of changing earnings inequality," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 69-133.

    More about this item


    Unskilled unemployment; educational upgrading; welfare state; manufacturing employment.;

    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


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