The labour market over the business cycle: can theory fit the facts?

We examine the ability of six labour market models to accountfor the business cycle behaviour of UK labour markets when embeddedin a stochastic growth model. We assess the models in termsof : (i) their ability to mimic general business cycle correlationsand volatility (ii) their success at explaining the persistenceof labour market fluctuations and (iii) whether they can explainwhy the growth and speed of adjustment of labour market variableschanges between periods of expansions and contractions. Themain success of the models is their ability broadly to accountfor business cycle correlations and comovements and the variationsin employment/unemployment growth rates between expansions andcontractions. However, there are three main failures: (i) themodels tend to produce insufficiently volatile employment andunemployment fluctuations (ii) they tend to produce too stronga correlation between wages and employment and (iii) most ofthem generate only brief temporary deviations in unemploymentin response to shocks rather than the protracted dynamics ofthe data.     

Employment and innovation in advanced communication technologies: Strategies for growth and the growth of employment

If recent political interest and media hype is to be believed, the ‘information society’ is at last upon us, and could signal the end of work as we know it. But what evidence is there of how these new information highways will change work? In this article, based on recent case-study research, a set of messages about how organizations are applying and responding to the new advanced communication technologies are presented. First, innovation was most successful where managers sought to mobilize the new potential of these technologies, rather than implementing rationalization and retrenchment. Second, in order to reap these benefits, it was necessary to adapt organizationally as well as to adopt the technology. Third, one innovation strategy is not good for all situations: the way forward is dependent on the current situation of the organization, rather than on general principles.     

Wages,work, and unemployment

This paper provides new evidence on unemployment durations for individuals in Great Britain using a three state Markov framework in a competing risk setting and a nationally representative data set. The analysis is based on the premise that an individual's movements between labour market states can be represented by a Markov process. The modelling procedure combines the dynamic properties of the search approach to unemployment while using the labour supply decision at each moment in time in response to the expected wage to include participation decisions. Using this framework, we are able to determine the effect of individual characteristics, including the expected wage, on labour market behaviour. The model is estimated separately for men and women, and for young and mature workers, to investigate whether labour market behaviour differs for these groups. The validity of the Markov assumptions are tested using different model specifications, and changes in the model over calendar time are also presented.