Citation

Discussion Paper Details

Please find the details for DP23 in an easy to copy and paste format below:

Full Details   |   Bibliographic Reference

Full Details

Title: Rational Expectations and Labour Market Equilibrium in Britain 1855-1913

Author(s): Timothy J. Hatton

Publication Date: July 1984

Keyword(s): Britain, Labour Markets, Phillips Curve and Rational Expectations

Programme Area(s): Human Resources

Abstract: This paper tests a two equation model of supply and demand for labour for 1857-1913, the period which was the focus of the original Phillips curve study. The basic structure is an equilibrium model of the labour market with "classical" characteristics arising from a surprise supply function and the assumption that expectations are formed rationally i. e. in a way consistent with the model itself. Tests of exclusion restrictions on a general reduced form tend to weakly reject these joint hypotheses. Tests on a structural model reject unanticipated wage change in a favour of actual wage change as the appropriate variable in the supply function. This gives support to the original Phillips curve formulation.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=23

Bibliographic Reference

Hatton, T. 1984. 'Rational Expectations and Labour Market Equilibrium in Britain 1855-1913'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=23