High measured unemployment, often accompanied by rapid wage and price increases, has plagued most Western nations in the 1970's. The aim of this paper is to appraise, albeit crudely, the contribution of three factors to these patterns in the Netherlands, Sweden, the United Kingdom, and the United States. These factors are: 1) insufficient aggregate demand, 2) structural imbalances in the composition of labor supplies and demands, and 3) changes in the relationship of measured unemployment to excess labor supply (referred to as the U-ES relationship). My main thesis is that measured unemployment bears a different relationship to real excess labor supply in the 1970's than it did in the 1960's, explaining much of the increase in measured unemployment from the 1960's to the 1970's.

Journal Article Earnings Capacity and its Utilization Get access Irwin Garfinkel, Irwin Garfinkel University of Wisconsin-Madison Search for other works by this author on: Oxford Academic Google Scholar Robert Haveman Robert Haveman University of Wisconsin-Madison Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 92, Issue 3, August 1978, Pages 375–385, https://doi.org/10.2307/1883149 Published: 01 August 1978