Shocks and Structural Breaks: Labor Market Reforms in the United Kingdom

November 1, 1994

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Eswar S Prasad, and Ramana Ramaswamy. Shocks and Structural Breaks: Labor Market Reforms in the United Kingdom, (USA: International Monetary Fund, 1994) accessed September 20, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper analyzes the effects of the labor market reforms launched in the early 1980s by the Conservative government led by Mrs. Thatcher. It is argued that the increase in the growth of labor productivity in manufacturing after 1980 as well as the improvement in the responsiveness of employment to variations in output can be largely attributed to the success of the reforms in reducing industrial disputes and removing a number of structural impediments in the labor market. However, the reforms did not succeed in moderating real wage growth or improving the tradeoff between wage inflation and unemployment. This is attributed to certain aspects of the wage bargaining system and the influence of relative wage norms in the process of wage determination.

Subject: Employment, Labor, Labor market reforms, Production, Productivity, Wages

Keywords: Employment, Europe, Inflation, Inflation-unemployment tradeoff, Labor market reforms, Product wage, Productivity, Real wage, Wage, Wage inflation, Wage relativity, Wage-bargaining system, Wages, Wage-unemployment tradeoff, WP

Publication Details

Pages:

30
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1994/152
Stock No:

WPIEA1521994
ISBN:

9781451922653
ISSN:

1018-5941

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