Long-Term Unemployment, the Invention of 'Hysteresis' and the Misdiagnosis of Structural Unemployment in the UK

Posted: 29 Feb 2008  

David Webster

Government of the United Kingdom - Glasgow City Council

Abstract

This paper investigates the empirical basis for the belief that unemployment makes people less employable', and that the existence of a pool of long-term unemployed people is therefore in itself a barrier to full employment. Drawing on data for Great Britain from the 1940s to the present day, it shows that this idea has arisen through misinterpretations of the statistical evidence. The resulting policies, besides diverting resources from the demand-side programmes appropriate to the true situation of structural unemployment, appear to have created a problem of the kind they were intended to address, by encouraging unemployed people to move onto sickness benefits.

Keywords: Long-term unemployment, Unemployment persistency, Hysteresis, Employability, State dependence

Suggested Citation

Webster, David, Long-Term Unemployment, the Invention of 'Hysteresis' and the Misdiagnosis of Structural Unemployment in the UK. Cambridge Journal of Economics, Vol. 29, Issue 6, pp. 975-995, 2005. Available at SSRN: https://ssrn.com/abstract=904707

David Webster (Contact Author)

Government of the United Kingdom - Glasgow City Council ( email )

Glasgow Scotland
United Kingdom

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