An anatomy of unemployment flows in Great Britain / P.N. Junankar and S. Price.

Abstract

The aim of this paper is to model the flows of people who join and leave the unemployment stock. In this paper we analyse the unemployment flows in Great Britain of males and females (separately) for the period 1967(3) to 1980(2). With these estimates we predict the unemployment stocks and find our predictions (within the sample period) are surprisingly good. Our main findings are that the growth in unemployment in Britain is explained by structural change in the economy and due to a lack of aggregate demand. An increase in real wages, per unit of output (which leads to a fall in profitability of firms) is partly responsible for the increase in unemployment. We also find that an increase in unemployment benefits leads to a fall in unemployment. We suggest that this latter result should be treated with caution. Our main result is that an appropriate way of modelling unemployment stocks is to begin by modelling unemployment flows. Show more