Working Paper: CEPR ID: DP541
Authors: Stephen Broadberry
Abstract: This paper takes a fresh look at the low unemployment in postwar Britain, which is seen as exceptional rather than the norm. During the 1950s and 1960s low unemployment was reconciled with stable inflation through the exercise of wage restraint. Yet the postwar settlement which underpinned this wage restraint also allowed the entrenchment of restrictive practices, which inevitably slowed the growth of productivity and the feasible real wage, thus contributing to Britain's relative economic decline.
Keywords: unemployment; real wage; postwar settlement
JEL Codes: 044; 122; 820
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Productivity growth (O49) | Feasible real wage (J38) |
| Feasible real wage (J38) | Unemployment rate (J64) |
| Postwar settlement (N44) | Productivity growth (O49) |
| Postwar settlement (N44) | Restrictive practices and collusion (L42) |
| Restrictive practices and collusion (L42) | Productivity growth (O49) |
| Wage restraint (E64) | Unemployment rate (J64) |