> FYI > ---------- > From: > [EMAIL PROTECTED][SMTP:[EMAIL PROTECTED]] > Subject: Long-Term Unemployment Myths > > LONG-TERM UNEMPLOYMENT MYTHS > > A warm welcome for a new paper by Stephen Machin (UCL) and Alan > Manning (LSE) `Long-Term Unemployment: Exploding Some Myths', > Employment Audit No.8 (Employment Policy Institute), Summer 1998. > > This independently corroborates many of the points made in my > University of Glasgow paper `The L-U Curve: On the non-existence of > a > long-term claimant unemployment trap' (May 1997), specifically (all > quotes from Machin & Manning):- > > * "every time and every place there are high rates of > unemployment, > there is a high incidence of long-term unemployment"; "long-term > unemployment has never been a problem when unemployment itself is > low" > > * it is a myth "that there has been a ratcheting up in the level > of > long-term unemployment so that, for a given level of unemployment, we > > now have a higher incidence of LTU" > > * "while the long-term unemployed do find it more difficult to > find > work than the short-term unemployed, this has always been true and > their relative disadvantage does not seem to have worsened over time" > > * "any policy that acts to increase the outflow rate from > unemployment will act to reduce the incidence of long-term > unemployment; and, moreover, there is no reason why such policies > should particularly be focussed on those who have been unemployed for > > long periods" > > * "The most successful recipe for helping the long-term unemployed > > back into work is a buoyant labour market. If we were fortunate > enough to have unemployment rates fall to the levels we had in the > 1960s there is little doubt that we would have a similar incidence of > > long-term unemployment whether we have the `New Deal' or not" > > * "as the long-term unemployed are concentrated in the areas where > > unemployment itself is highest and there are fewest jobs, it is quite > > likely that it is going to be more difficult to find private-sector > jobs for the long-term unemployed in depressed regions (which is the > preferred outcome in the `New Deal')" (this point - about areas > rather > than regions - is also made in Turok & Webster, Local Economy > Feb.98). > > Machin and Manning refer to a longer version of their paper: `The > causes and consequences of long-term unemployment in Europe', > forthcoming in O.Ashenfelter and D.Card (eds) Handbook of Labor > Economics, North Holland Press (an update of a US handbook first > published in 1986 when Ashenfelter's co-editor, ironically, was none > other than Richard Layard, one of the principal advocates of the > ideas > being criticised here). > > I hope this additional support will make it easier to obtain the > required changes in UK government employment policy. At present > almost all the effort and all the additional expenditure is being > devoted to what is largely a non-problem, the supposed lack of > "employability" of particular segments of the labour force. > Meanwhile, spending is being cut on the only type of policy which > would make a real difference, namely the promotion of blue collar > jobs > in areas of high unemployment, through such things as derelict land > reclamation in the cities. And the problem is being worsened by > macro-policies which undermine the manufacturing sector. > > On the basis of the shorter Machin-Manning paper (I have not yet seen > > the longer one), it is worth noting a few apparent differences > between > their analysis and mine:- > > * Their analysis is purely in terms of LAPU (the proportion of the > > unemployed who are long-term). For the reasons given in my paper, I > think L (the proportion of the labour force who are long-term > unemployed) is a better measure. > > * They do not allow for the 6-quarter timelag between change in > total unemployment and change in LAPU and hence show the type of > "cobweb cycle" chart for the UK 1955-96 which the OECD (in Employment > > Outlook and the 1994 Jobs Study) has incorrectly interpreted as > indicating the existence of "ratcheting" of the level of LTU. > > * They imply that all of the long-term unemployed find it more > difficult to obtain jobs and will therefore benefit from New Deal > type > policies; my analysis is that it is only a subset of the long-term > unemployed with genuine employment handicaps who will benefit from > the > New Deal. The remainder simply have the misfortune to live in areas > of high unemployment, or are unlucky for stochastic reasons, and any > New Deal spending on them is a waste of money. > > * The conclusion could be drawn from their analysis that the only > possible solution lies in a general increase in labour demand. I do > not think that this is realistic in current circumstances (though it > should be a prime policy objective for the medium term). Much more > immediately practical is action to combat urban-rural manufacturing > shift and rebuild the economy of the coalfields. Machin and Manning > refer to "depressed regions" when the real problem is depressed areas > > - cities and mining areas - within regions. It is a reflection of the > > poor state of UK unemployment statistics that even economists > prepared > to challenge the prevailing orthodoxy do not have a clear picture of > the geography of unemployment. > > I was interested in their comment that the low Swedish ratio of > long-term to total unemployment is simply due to the recording > system. > In a recent cross-national regression analysis (LSE CEP Discussion > Paper 293 and J.of Economic Perspectives 1997), Jackman, Layard and > Nickell have placed great weight on the supposed efficacy of Swedish > active labour market policies in reducing long-term unemployment. > This would be completely discredited by the Machin-Manning view. > > If anyone wishes to follow up any of these issues, please do get in > touch. > > The full reference to my paper is:- > Occasional Paper No.36, "The L-U Curve: On the Non-Existence of a > Long-Term Unemployment Trap and its Implications for Policies on > Employment and Area Regeneration", May 1997, by David Webster, ISSN > 1355-1604 ISBN 1 871769 98 1, price £3.95 including p.& p., > available > from the Department of Urban Studies, University of Glasgow, 25 Bute > Gardens, Glasgow G12 8RS, tel.0141-339 8855, Fax: 0141-330 4983 > > David Webster > Glasgow City Housing 8 September 1998 > > [EMAIL PROTECTED] > >
