Skip to main content
Article thumbnail
Location of Repository

Unemployment in Britain: a European success story

By Christopher Pissarides


Unemployment in Britain has fallen from high European-style levels to US levels. I argue that the key reasons are first the reform of monetary policy, in 1993 with the adoption of inflation targeting and in 1997 with the establishment of the independent Monetary Policy Committee, and second the decline of trade union power. I interpret the reform of monetary policy as an institutional change that reduced inflationary expectations in the face of falling unemployment. The decline of trade union power contributed to the control of wage inflation. The major continental economies failed to match UK performance because of institutional rigidities, despite low inflation expectations

Topics: HD Industries. Land use. Labor
Publisher: Centre for Economic Performance, London School of Economics and Political Science
Year: 2003
OAI identifier:
Provided by: LSE Research Online

Suggested articles


  1. (1993). Active Labour Market Policies: Assessing Macroeconomic and Microeconomic Effects."
  2. (2003). Company Start-Up Costs and Employment." doi
  3. (2002). Does Entry Regulation Hinder Job Creation? Evidence from the French Retail Industry." Discussion Paper No. doi
  4. (1985). Economics of Worldwide Stagflation. doi
  5. (2001). Employment Protection." doi
  6. (2001). Entrepreneurship, Start-up Costs and Employment." doi
  7. (2001). European Integration, Liberalization, and Labor-Market Performance." In Welfare and Employment
  8. (2002). Evaluating the Employment Impact of a Mandatory Job Search Assistance Program." doi
  9. (1999). Having None of It, London:
  10. (1986). Hysteresis and the European Unemployment Problem." doi
  11. (1999). Labor Market Institutions and Economic Performance." doi
  12. (2003). Labour Market Performance and Start-Up Costs: OECD Evidence." Working Paper No. 849, CESifo,
  13. (1992). Loss of Skill during Unemployment and the Persistence of Employment Shocks." doi
  14. (1999). Microeconomic Perspectives on Aggregate Labor Markets." doi
  15. (2002). Monetary Policy and Stagflation in the UK." Working Paper No. 155, Bank of England.
  16. (1999). Policy Influences on Unemployment: The European Experience." doi
  17. (1994). Structural Slumps. doi
  18. (2000). Summary Indicators of Product Market Regulation with an Extension to Employment Protection Legislation,” Working Paper No. doi
  19. (2001). The Beveridge Curve, Unemployment and Wages in the OECD from the 1960s to the 1990s." Discussion Paper no. 502, Centre for Economic Performance.
  20. (1995). The Economics of the Trade Union. Cambridge: doi
  21. (2002). The Effect of Inflation Targeting on the Behavior of Expected Inflation: Evidence from an 11 Country Panel." doi
  22. (2000). The Role of Shocks and Institutions in the Rise of European Unemployment: the Aggregate Evidence." doi
  23. (1997). Unemployment and Labor Market Rigidities: Europe versus North America." doi
  24. (1986). Unemployment and Vacancies in Britain." doi
  25. (1991). Unemployment: Macroeconomic Performance of the Labour Market. doi
  26. (2003). Women in the Labour Force: How Well is Europe Doing?"

To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.