2016年-PIIE彼得森国际经济研究所_Labor_Market_Slack_in_the_United_Kingdom_28页_236kb

Summary of "Labor Market Slack in the United Kingdom"

Core Content

This paper by David N. F. Bell and David G. Blanchflower critically examines the level of labor market slack in the United Kingdom, focusing on unemployment and underemployment. The authors argue that the Monetary Policy Committee (MPC) of the Bank of England has made unsubstantiated downward adjustments to both measures, which they believe understate the true level of slack in the labor market.

Main Arguments

1. Unemployment Adjustments

• The MPC estimates the medium-term equilibrium unemployment rate to be "probably in the region of 1-1.5 percent."
• The authors challenge this by arguing that the long-term unemployed do not exert less downward pressure on wages than the short-term unemployed.
• They point out that the MPC's adjustment assumes that long-term unemployed are less likely to find work and thus have less impact on wages, but no evidence supports this claim.
• The authors argue that aggregate time series analyses cannot distinguish between the effects of total unemployment and long-term unemployment due to their high correlation.
• They conclude that the UK evidence does not support the idea that long-term unemployment is a separate factor in wage determination.

2. Underemployment Adjustments

• The MPC reduces the underemployment rate by half, but the authors believe this is inappropriate.
• They argue that the MPC's estimate of the medium-term equilibrium average hours is based on uncertain and limited evidence.
• The authors use Labour Force Survey (LFS) data to show that the underemployment rate is high, with an additional 1.8 percent to the unemployment rate in the latest data.
• They estimate that the total underemployment in the UK amounts to approximately 0.5 hours per worker, which, when applied to the 32.7 million workers, results in half a million additional workers in underemployment.
• The authors reject the MPC's adjustment, stating that no evidence supports the idea that only half of the underemployment gap represents labor market slack.

Key Findings

• The unemployment rate has fallen from 7.9 percent in May 2010 to 6.6 percent in March 2014, but other indicators of labor market slack suggest the economy is still far from full employment.
• The number of underemployed workers has increased, and the proportion of self-employed workers has also risen, which may indicate structural issues in the labor market.
• Real wage growth has been negligible, with negative real wage growth due to low nominal wage growth and high inflation.
• The MPC's claim that long-term unemployment has no effect on wages is not supported by empirical evidence.
• The authors present new evidence using LFS data to show that long-term unemployment does not have a smaller wage-depressing effect than short-term unemployment.

Evidence on Wage and Employment Trends

• Nominal wage growth in the UK remains low, with 0.7% in the private sector and 0.6% in the national average for February–April 2014.
• Real wage growth is negative, with CPI inflation at 1.8% and RPI inflation at 2.5%.
• Long-term unemployment has fallen as the overall unemployment rate has declined, but the proportion of long-term unemployed remains high.
• Underemployment is not decreasing at the same rate as unemployment, and the gap between actual and desired hours is still significant.

Conclusion

• The authors conclude that the MPC's adjustments are based on guesswork and lack empirical support.
• They argue that the true level of labor market slack is greater than the MPC estimates, and that no downward adjustment should be made for either unemployment or underemployment.
• The wage curve remains flat, and real wage growth is not expected to rise soon.
• The authors present new evidence that long-term unemployment has a similar impact on wages as short-term unemployment, and that underemployment is a significant indicator of labor market slack.

Supporting Evidence

• Long-term unemployment in the UK has fallen but remains a large portion of total unemployment.
• Underemployment has increased, with more workers wanting to work longer hours.
• Empirical studies from the US and UK show that long-term unemployment does not have a smaller impact on wage growth or inflation than short-term unemployment.
• Aggregate time series analysis is limited in its ability to isolate the effects of long-term unemployment.
• The MPC's methods are questionable, as they exclude robust evidence and make unsubstantiated assumptions.

Final Statement

The paper concludes that the MPC's approach to measuring labor market slack is flawed, and that real wage growth is unlikely to rise soon. The authors believe that the true level of slack is higher than officially reported, and that policy should reflect this reality.