7.1 INTRODUCTION In Chapters 4 and 5 we discussed some of the major theoretical or conceptual challenges that have been made against the NAIRU and its use in the policy arena. In this chapter we examine more closely the empirical anomalies that lead one to reject the basic underpinnings of the full employability framework. In particular we focus on the role that aggregate demand plays in employment generation and unemployment. We are reminded of the warning from Beveridge (1909: 3): ‘the inquiry must be one into unemployment rather than into the unemployed’. In this regard, we argue that the overwhelming empirical evidence supports the notion that persistent unemployment and underemployment has been produced by systemic macroeconomic failures, rather than intrinsic ﬂaws in the individuals who have fallen victim to the failure of economies to produce enough hours of work. Freeman (2005: 138) provides an entrée into the rest of the chapter: What explains strong adherence to a claim whose empirical support is ‘fragile’, ‘mixed’, ‘contingent on factors that need to be clariﬁed’, and so on? The best interpretation I can give is that these economists come to the problem of explaining unemployment with the prior that markets work well absent interventions, and thus that the right place to look for causes of problems is at institutions that may impede the operation of the markets. They have fairly tight bands around this prior, so that it dominates weak evidence, and thus produces posteriors close to the priors, as in...
You are not authenticated to view the full text of this chapter or article.
Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.
Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.
Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.