Unemployment is an emotive issue and this is reflected in the terminology adopted in the economic analysis of unemployment. The Keynesian concept of full employment has already been used in the previous chapters but without any careful consideration of what it means. The social objective of achieving ‘full employment’ has had a powerful appeal in this century and, following the adoption of Keynesian economics, its maintenance has been treated as a prime responsibility of government. Only in the last decade has it become increasingly apparent that government policies are unable to produce the low rates of unemployment experienced in the 1950s and early 1960s. Consequently more attention is now being given to analysing the supply side of the economy. It is to this topic that we now turn, this chapter outlining Keynesian and neoclassical ideas on the determination of the level of unemployment. In doing so we consider whether full employment has a satisfactory theoretical definition and, if given such a definition, it is possible in practice to measure its appropriate level.
Unable to display preview. Download preview PDF.
- R. E. Lucas and L. A. Rapping, ‘Real Wages, Employment and Inflation’, Journal of Political Economy, 77 (1969).Google Scholar
- D. T. Mortensen, ‘A Theory of Wage and Employment Dynamics’, in Microeconomic Foundations of Employment and Inflation Theory, ed. E. Phelps (London: Macmillan, 1970).Google Scholar
- C. C. Holt, ‘How Can the Phillips Curve be Moved to Reduce Both Inflation and Unemployment?’, in Microeconomic Foundations, ed. Phelps.Google Scholar
- C. C. Holt, ‘Job Search, Phillips Wage Relation and Union Influence: Theory and Evidence’, in Microeconomic Foundations, ed. Phelps.Google Scholar
- E. Phelps, ‘Money Wage Dynamics and Labour Market Equilibrium’, in Microeconomic Foundations, ed. Phelps.Google Scholar
- F. Hahn, ‘Unemployment from a Theoretical Viewpoint’, Economica, 47 (1980).Google Scholar
- R. E. Haveman, ‘Unemployment in W. Europe and the US: A Problem of Demand, Structure and Measurement’, American Economic Review (1978).Google Scholar
- S. Nickell, ‘A Picture of Male Unemployment in Britain’, Economic Journal, 90 (December 1980).Google Scholar
- D. MacKay and G. Reid, ‘Redundancy, Unemployment and Manpower Policy’, Economic Journal, 82 (1972).Google Scholar
- D. Gujerati, ‘The Behaviour of Unemployment and Unfilled Vacancies’, Economic Journal (March 1972).Google Scholar
- D. Maki and Z. A. Spindler, ‘The Effect of Unemployment Compensation on the Rate of Unemployment in Great Britain’, Oxford Economic Papers, 27 (November 1975).Google Scholar
- J. S. Cubbin and K. Foley, ‘The Extent of Benefit Induced Unemployment in Great Britain: Some New Evidence’, Oxford Economic Papers (March 1977).Google Scholar
- G. Lawson, ‘Comparing Profits: The Grand Illusion’, The Sunday Times (30 January 1978).Google Scholar