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Title: The Thatcher Miracle?

Author(s): Richard Grenville Layard and Stephen Nickell

Publication Date: April 1989

Keyword(s): Inflation, Productivity, Trade Unions, Unemployment and United Kingdom

Programme Area(s): Applied Macroeconomics and International Macroeconomics

Abstract: Since 1979 productivity growth in Britain has improved markedly compared with Europe. The turnaround in productivity growth has two main causes. The British economy was subjected to a far more severe contraction of demand in 1980-81 than any other country. This led to a new realism, which was sustained by the legal changes in trade union power. Since 1979 there has been a worsening in the trade-off between unemployment and inflation. The poor unemployment/inflation trade-off is due to the neglect of skill training and education (causing skill shortages) and to the build-up of long-term unemployment (which does little to restrain inflation).

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Bibliographic Reference

Layard, R and Nickell, S. 1989. 'The Thatcher Miracle?'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=315