ABSTRACT
The dismal record of recent unemployment trends in the U.K. is well known to the general public, economists and policy makers. The subject receives constant attention in the media and economists have made significant (at least in quantity if not in quality) contributions to the debate. Numerous recent studies on unemployment are testimony to this (1). What is generally not so widely appreciated is the equally gloomy employment situation in recent years in the U.K. Perhaps paralleling this, the analysis and forecasting of employment in the U.K. has recently received relatively less attention by economists (2). Yet between March 1977 and March 1982, employment fell from 21,969,000 to 20,626,000, a drop of some 1,343,000. Obviously, the unemployment situation is of great concern in its own right. Nonetheless, the concern is magnified by the fact that the massive increase in unemployment has been accompanied by job loss on a fairly large scale rather than by constant or rising employment. Indeed, over the same period, measured unemployment (3) rose by some 1,448,000. Thus, almost all the rise in unemployment may be due to job loss and not simply to increased registration due to an alleged increase in the laxity of the unemployment benefit system. The aim of this paper is to attempt to fill this gap by analysing and estimating a simple model for explaining employment in the U.K.
