Hans Singer's model of the Severity of Recessions

Abstract

This paper draws attention to the innovative but neglected work of Hans Singer on the dynamics of unemployment. Influenced by Keynes, in the late 1930s Singer enquired into the relationship between the inflow into unemployment— resulting primarily from (involuntary) separations from employment—and the size of the resultant fluctuations in the level of unemployment. His focus was on the determinants of the severity—measured in terms of how far unemployment rises—of recessions. We illustrate his approach by looking at quarterly data for the claimant count and its associated inflow and outflow in the UK over the period 1989–2003, a period which includes one major recession episode. In addition to drawing attention to Singer’s ideas, the paper also extends his model by taking into account recent empirical evidence on the behaviour of one of the key variables in his model. We argue that, with this extension, Singer’s elegant and parsimonious model of unemployment dynamics is a useful complement to Keynes’s ideas on the fluctuations in aggregate demand and output, and is of contemporary relevance