Abstract: | 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. |