Long‐term Unemployment and the Labour Market: some further results

In a previous Briefing Paper we discussed the current high rate of long‐term unemployment. We described the process by which the ratio of long‐term unemployment to total unemployment was determined and suggested some explanations for the rapid rise in long‐term unemployment since 1980. We also investigated the role of long‐term unemployment in shifting the relationship between unemployment and vacancies. In this Briefing Paper we extend our study to consider the relationship between unemployment and inflation. In particular we discuss the apparent failure of high unemployment to affect the growth of real wages. Finally we compare some policies for reducing unemployment.