ABSTRACT
In this chapter we return to consider the labour market which has been largely ignored since section 1. Although there will be some repetition of material it is included in order to preserve the unity of this chapter. Among the more prominent controversies in macroeconomic theory in the postwar period has been the question of explaining the existence of persistent unemployment in western capitalist economies. Although unemployment on a scale experienced in North America and Europe during the 1920s and 1930s has not yet recurred, it is still subject to considerable fluctuation over the cycle and full employment maintains its importance as a major object of economic policy. In this chapter the factors that account for such continuing unemployment will be discussed from ‘classical’ and Keynesian perspectives.
