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...

In normative public economics it is crucial to know how fast the marginal utility of income declines as income increases. One needs this parameter for cost-benefit analysis, for optimal taxation and for the (Atkinson) measurement of inequality. We estimate this parameter using four large...

Our conclusions are that the most important influences on unemployment come from the following. (i) The longer unemployment benefits are available the longer unemployment lasts. Similarly, higher levels of benefits generate higher unemployment, with an elasticity of around one half. On the other...

Do other peoples’ incomes reduce the happiness which people in advanced countries experience from any given income? And does this help to explain why in the U.S., Germany and some other advanced countries, happiness has been constant for many decades? The answer to both questions is ‘Yes’....

According to Paul Krugman, “the European unemployment problem and the US inequality problem are two sides of the same coin”. In other words, both continents have had the same shift in demand towards skill; in the US relative wages have adjusted and in Europe not. The implication of this...

Why is unemployment higher in some countries than others? Why does it fluctuate between decades? Why are some people at greater risk than others? Layard and Nickell have worked on these issues for thirty years. Their famous model, first published in 1986, is now used throughout the world. It...