This article summarises the results of research carried out in the Bank which assesses the contributions of a range of factors, including the real wage and its determinants, that may account for the greater buoyancy of employment in the United States than in the United Kingdom during the period between 1974 and 1984. The results suggest that in both countries, other things being equal, an increase in the real wage has a depressive effect on employment. The research also suggests that the most important means by which the sizable increase in US labour supply over this period was largely drawn into employment was through reducing real wage growth.
Employment creation in the United States and the United Kingdom