Working Paper: NBER ID: w4384
Authors: David G. Blanchflower; Richard B. Freeman
Abstract: In this paper we evaluate the success of policies that were implemented in the 1980s that were designed to improve the workings of the UK labour market. Our primary conclusion is that the Thatcherite reforms succeeded in their goals of weakening union power; may have marginally increased employment and wage responsiveness to market conditions and may have increased self-employment. They were accompanied by a substantial improvement in the labour market position of women. But the reforms failed to improve the responsiveness of real wages to unemployment; they were associated with a slower transition from nonemployment to employment for men; a devastating loss in full-time jobs for male workers and produced substantial seemingly noncompetitive increases in earnings inequality.
Keywords: Thatcher reforms; UK labor market; union power; employment; earnings inequality
JEL Codes: J23; J31; J52
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Thatcher reforms (E65) | weakening of union power (J58) |
| weakening of union power (J58) | increase in employment (J68) |
| Thatcher reforms (E65) | increase in self-employment (J23) |
| Thatcher reforms (E65) | failure to improve wage responsiveness to unemployment (F66) |
| Thatcher reforms (E65) | slower transition from nonemployment to employment for men (J69) |
| Thatcher reforms (E65) | devastating loss in full-time jobs for male workers (F66) |
| Thatcher reforms (E65) | substantial increases in earnings inequality (D31) |