This paper tests the ‘morale’ theory of downward nominal wage rigidity. This theory relies on workers disliking nominal pay cuts : cuts should make workers less happy. We investigate this using panel data on individual employees’ pay and satisfaction. We con…rm that nominal cuts do make...

Unemployment varies substantially over time and across subgroups of the labour market. Worker flows among labour market states act as key determinants of this variation. We examine how the structure of unemployment across groups and its cyclical movements across time are shaped by changes in...

The increase in unemployment in the United Kingdom that accompanied the Great Recession has been conspicuous by its moderation. The rise in joblessness is dwarfed by the recent experience of the United States, by past recessionary episodes in the U.K. and by the contraction in GDP in the U.K....

This paper shows that in the UK, increases in unemployment in a recession are driven by rises in the separation rate. A new decomposition of unemployment dynamics is devised that does not require unemployment to be in steady state at all times. This is important because low UK transition rates...

Producing high technology output and supplying sophisticated services often involves costly investment in industry specific skills. But the threat of poaching means that it is the individual "stakeholder", not the firm, who must bear the cost. We investigate various mechanisms for funding human...

Europe is rushing headlong into monetary union armed with preconditions reflecting mistrust among would-be partners rather than what is needed for a successful common currency. Current negotiations on the future structure and policy of EMU, in particular, seem to resemble a game of "Chicken"! It...