LONG‐TERM UNEMPLOYMENT IN BRITAIN AND THE EFFECTS OF THE COMMUNITY PROGRAMME
| DOI | http://doi.org/10.1111/j.1468-0084.1988.mp50004003.x |
| Published date | 01 November 1988 |
| Author | Jonathan Haskel,Richard Jackman |
| Date | 01 November 1988 |
OXFORD BULLETIN OF ECONOMICS AND STATISTICS, 50,4(1988)
0305-9049 S3.00
LONG-TERM UNEMPLOYMENT IN BRITAIN
AND THE EFFECTS OF THE COMMUNITY
PROGRAMME
Jonathan Haskel and Richard Jackman *
I. INTRODUCTION
The enormous growth in long-term unemployment since 1979 is a fact both
widely known and universally deplored. But there is much less understanding
of the causes of that growth, let alone agreement about what might be done to
reduce it. In this paper, we document the growth of long-term unemployment
in some detail, and are thereby able to offer some observations on the causes
of the increase and on the effects of policy measures.
The plan of the paper is as follows. We dispense with any general back-
ground to the problem (see Jackman et al. (1986) for a discussion of the
characteristics and experience of the long-term unemployed, historical and
international experience etc.). We start by attempting to measure as precisely
as possible the extent of the growth in long-term unemployment. The
problem here is to construct a consistent series in the face of the frequent
changes in definition that cause the official figures to be a misleading guide.
Our estimates are based on the procedure described in Section II.
The main result of Section II is to show that the continuing high levels of
long-term unemployment into the mid 1980's are primarily attributable to a
continuing high inflow of people into long-term unemployment. Section III
shows that a relatively simple 'stylized fact', a sharp decline in the outflow rate
from unemployment at all durations during the 1980-81 recession which has
not subsequently been reversed, can account for both the magnitude and the
timing of the growth in long-term unemployment.
Section IV examines the impact of policy measures adopted by the govern-
ment, and in particular the Conmiunity Programme. To focus on the effects of
the Community Programme, we investigate the behaviour of age-specific
outflow rates from long-term unemployment, on the grounds that the bulk of
participants in Community Programme projects are young people. Our
results are that the expansion of the Community Programme has been
*We would like to thank the Department of Employment for help with the data, whilst retain-
ing any responsibility for errors. Financial support from the Economic and Social Research
Council is gratefully acknowledged. We are very grateful to Suzie Vivian for typing this paper.
379
380 BULLETIN
associated with a well-defined, though quite small, increase in the long-term
unemployment outflow rates of young people, but may have been associated
with a decrease in the outflow rates of older people. This suggests the pos-
sibility that some of the work undertaken by Community Programme projects
may be displacing work that would otherwise have been taken on by older
people.
II. THE INCREASE IN LONG-TERM UNEMPLOYMENT
(a) Definition of Long- Term Unemployment
Long-term unemployment is defined as the number of people who, at a point
in time, have been continuously unemployed for a period in excess of a year.'
In this paper we examine long-term unemployment of adult (18 years and
over) men in Britain We exclude women and juveniles because the official
unemployment statistics, which constitute our basic data source, are a poor
measure of the actual unemployment rates of these groups.
Since October 1982, the official unemployment statistics have been based
on a count of the number of people in receipt of unemployment benefit (or of
supplementary benefit by reason of unemployment), a measure known as the
'claimant count'. This measure differs from the usual 'economic' definition of
unemployment (those out of work and looking for work) because some
people draw unemployment benefits though not looking for work, while
others who are looking for work are not eligible for benefits. The Labour
Force Survey measures unemployment according to the standard economic
definition and a comparison of this survey with the claimant count showed
that in the spring of 1985 less than half of the unemployed women as against
nearly 90 percent of unemployed men claimed benefit.2 It thus seems that the
claimant count is likely to be so inaccurate an indicator of the level of female
unemployment that it is better to exclude women altogether from the data set.
This is particularly so with regard to long-term unemployment since after a
year unemployed people exhaust their entiflement to unemployment benefit
and become eligible instead for supplementary benefit, and married women
are generally not eligible for supplementary benefit.
We exclude juveniles in part because their unemployment rates are
substantially affected by the provision of youth training programmes which
we do not analyse in this paper. There are also a number of technical dif-
ficulties in adjusting the data to a consistent basis (see below) with regard to
the treatment of school-leavers.
1i definition thus excludes people who are unemployed for the bulk of their time over a
period of years but who take occasional casual or temporary work and who may thus not be
continuously unemployed for a period in excess of a year. There is very little data on such
repeat spells however.
2'Unemployment Figures: The Claimant Count and the Labour Force Survey', Depart-
ment of Employment Gazette, October 1986, pp. 417-421.
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