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CEP occasional paper

Incurable unemployment: a progressive disease of modern societies?

'It is widely acknowledged that the contemporary unemployment problem is very largely a problem of unemployed unskilled workers. This paper argues a. that high levels of unemployment and increasing dispersion in the primary labour income distribution are intimately related; b. that both reflect the impact of the accumulation of technology on the job structure; c. skill shortages are to be explained in increasing part by limits to the available stock of learning ability as well as to inefficiencies in training institutions; d. a sizable quantum of existing unemployment arises because the market clearing wage for people of low learning ability falls below either a statutory minimum wage or the reverse wage as set by the social security minimum; e. adequate discussion of these hypotheses is inhibited by a variety of taboos.

Going from analysis to prescription, the paper argues that the more serious social problem is not unemployment per se, but the increasing inequality of condition of which it is a symptom. It seems particularly important to stress this, given that about the only cure for unemployment on offer seems to be greater 'flexibility' - reduction of worker-protection 'rigidities' - which would increase inequality; making the cure worse than the disease. Seemingly utopian long-run cures are considered, primarily moving towards a reasonably adequate universal citizen's income. This so redefines the rights and duties of citizenship that the necessary redistribution is seen not as taking from the able and industrious to give to the feckless, but as taking from the gifted lucky ones who can get satisfying work, in order to give both to the unlucky ones who cannot work and to those who could work - but who choose to do other things.'

Ron Dore

July 1994     Paper Number CEPOP06

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