Savvas Savouri

Regional migration in Britain: an analysis of gross flows using NHS Central Register data.

The hiring function represents the process whereby job seekers and vacancies are matched. Migration can be seen as a special case of hiring in which a job seeker in region I is matched to a job in region j. As a consequence, high unemployment regions will ceteris paribus experience larger out-migration flows.

Labour Market Policies and Unemployment in the OECD

The massive increase in unemployment throughout the OECD since the early 1970s has led governments in many countries to introduce, or to expand, labour market policies such as training schemes, employment subsidies, public works or schemes of counselling or assistance in job search. Such programmes have the objective of reducing unemployment by improving the workings of the labour market. This paper first briefly describes the types of programmes that have been introduced in many OECD countries in recent years. It then suggests a model of the labour market, based on the relationship of unemployment and vacancies (or Beveridge curve), within which the rise in unemployment can be analysed and the effects of policies and of institutions examined. Using the framework, we then identify the main factors causing shifts in unemployment and vacancy rates in 14 of the main OECD countries over the period 1970-88. Our main results are that while corporatism remains the institutional features with the biggest single impact in sustaining low unemployment rates, labour market policies also have a significant and well-defined effect on unemployment which appears large relative to the budgetary costs of the programmes.

Mismatch: a framework for thought

The rise in European unemployment is often blamed on increased mismatch between labour supply and demand- either by age, skill or region. To investigate this, we first develop models to explain differences in unemployment rates - both where labour supply is given and where it responds through labour mobility. Evidence supporting the model is presented using regional data for Britain and the US. We then ask how the intersectoral dispersion in unemployment rates is related to the overall average unemployment rate. We conclude from our model that average unemployment increases with the variance of relative unemployment rates across groups. Since this variance is substantial, it explains a good part of total unemployment. But, since the variance has not risen for skill groups or regions, it cannot explain the overall rise in European unemployment. We then turn to policy. If labour supply is given, there is a strong case for taxes and subsidies to redirect demand to high unemployment groups. But if there is a perfect labour mobility (infinitely elastic supply across groups), then even with job rationing there is no efficiency case for intervention except where there are externalities. With partial labour mobility the conclusion lies in between. Given the positive externalities of training and possible congestion externalities of migration, there may be a case for subsidies to training and to unemployment in high-unemployment areas.