Economics of Unemployment: An Historical Perspective

The figure of John Maynard Keynes has towered like a colossus over British economic theory for two generations, obscuring the important earlier work of a small group of classical economists who were concerned with British unemployment. Economics of Unemployment restores these pre-Keynesian economists to their rightful place in the British tradition. It examines their explanation of unemployment advanced during the 1920s and summarizes the work of the principal theoreticians, the most notable being Keynes's Cambridge Colleage, A.C. Pigou. The book reformulates their theory in modern terms in order to test it econometrically and to analyze its continuing relevance in the post-war period. When formalized this way, the theory anticipates a number of recent analytical developments in labor economics. Chapters cover the pre-Keynesian economists and their theory of unemployment; disequilibrium theory; job search and unemployment; structural disequilibrium; policies for structural unemployment; the pre-Keynesian theory and the Keynesian revolution; the determinants of employment and the real wage in inter-war Britain; labor supply, unemployment, and migration in inter-war Britain; and, the relevance of pre-Keynesian theory today.