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Macro-determinants of UK regional unemployment and the role of employment flexibility

  • Monastiriotis, Vassilis

This paper explores the macroeconomic determinants of UK regional unemployment and their relation to the influences on unemployment exerted by the levels and types of employment flexibility in the country. Theoretically the paper draws on Keynesian and monetarist explanations of unemployment and elaborates on how the two main theoretical approaches perceive the role of price stability, accumulation, macroeconomic shocks and labour market rigidities for unemployment. Empirically, the analysis relies on a novel set of flexibility indicators and examines their impact on regional unemployment, unemployment persistence, and adjustment to economic shocks. The results provide useful insights into the explored relationships and highlight the areas and conditions under which employment flexibility helps achieve favourable employment outcomes. The implications of the findings are discussed in the concluding section.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 44.

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Date of creation: Mar 2006
Date of revision:
Handle: RePEc:pra:mprapa:44
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  1. Andrew Glyn, 2003. "Labor Market Institutions and Unemployment: A Critical Assessment of the Cross-Country Evidence," Economics Series Working Papers 168, University of Oxford, Department of Economics.
  2. Olivier Blanchard & Justin Wolfers, 1999. "The Role of Shocks and Institutions in the Rise of European Unemployment: The Aggregate Evidence," NBER Working Papers 7282, National Bureau of Economic Research, Inc.
  3. Gianni Amisano & Massimiliano Serati, 2003. "What goes up sometimes stays up: shocks and institutions as determinants of unemployment persistence," Scottish Journal of Political Economy, Scottish Economic Society, vol. 50(4), pages 440-470, 09.
  4. Adsera, Alicia & Boix, Carles, 2000. "Must we choose? European unemployment, American inequality, and the impact of education and labor market institutions," European Journal of Political Economy, Elsevier, vol. 16(4), pages 611-638, November.
  5. Hall, Peter A. & Soskice, David (ed.), 2001. "Varieties of Capitalism: The Institutional Foundations of Comparative Advantage," OUP Catalogue, Oxford University Press, number 9780199247752, July.
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  7. Blanchflower, David G & Oswald, Andrew J, 1990. " The Wage Curve," Scandinavian Journal of Economics, Wiley Blackwell, vol. 92(2), pages 215-35.
    • David G. Blanchflower & Andrew J. Oswald, 1995. "The Wage Curve," MIT Press Books, The MIT Press, edition 1, volume 1, number 026202375x, June.
  8. Nickell, S. & Layard, R., 1997. "Labour Market Institutions and Economic Performance," Papers 23, Centre for Economic Performance & Institute of Economics.
  9. Jean-Paul Fitoussi & David Jestaz & Edmund S Phelps & Gylfi Zoega, 2000. "Roots of the Recent Recoveries: Labor Reforms or Private Sector Forces?," Post-Print hal-01011185, HAL.
  10. McCormick, Barry, 1997. "Regional unemployment and labour mobility in the UK," European Economic Review, Elsevier, vol. 41(3-5), pages 581-589, April.
  11. Engelbert Stockhammer, 2003. "The Rise of European Unemployment: A Synopsis," Working Papers wp76, Political Economy Research Institute, University of Massachusetts at Amherst.
  12. Weiss, Christoph R., 2001. "On flexibility," Journal of Economic Behavior & Organization, Elsevier, vol. 46(3), pages 347-356, November.
  13. Bertola, Giuseppe & Blau, Francine D & Kahn, Lawrence, 2001. "Comparative Analysis of Labour Market Outcomes: Lessons for the US from International Long-Run Evidence," CEPR Discussion Papers 3023, C.E.P.R. Discussion Papers.
  14. Davidson, Paul, 1998. "Post Keynesian Employment Analysis and the Macroeconomics of OECD Unemployment," Economic Journal, Royal Economic Society, vol. 108(448), pages 817-31, May.
  15. Luca Nunziata, 2002. "Unemployment, Labour Market Institutions and Shocks," Economics Series Working Papers 2002-W16, University of Oxford, Department of Economics.
  16. Engelbert Stockhammer, 2000. "Explaining European Unemployment: Testing the NAIRU Theory and a Keynesian Approach," Department of Economics Working Papers wuwp068, Vienna University of Economics and Business, Department of Economics.
  17. Hoon, Hian Teck & Phelps, Edmund S, 1992. "Macroeconomic Shocks in a Dynamized Model of the Natural Rate of Unemployment," American Economic Review, American Economic Association, vol. 82(4), pages 889-900, September.
  18. Addison, John T. & Teixeira, Paulino, 2001. "The Economics of Employment Protection," IZA Discussion Papers 381, Institute for the Study of Labor (IZA).
  19. Nickell, Stephen, 1998. "Unemployment: Questions and Some Answers," Economic Journal, Royal Economic Society, vol. 108(448), pages 802-16, May.
  20. David Gray, 2004. "Persistent Regional Unemployment Differentials Revisited," Regional Studies, Taylor & Francis Journals, vol. 38(2), pages 167-176.
  21. Ron Martin, 1997. "Regional Unemployment Disparities and their Dynamics," Regional Studies, Taylor & Francis Journals, vol. 31(3), pages 237-252.
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