The Aggregate Labour Market: An Empirical Investigation Into Market-Clearing for the UK

A two-equation model of the aggregate labor market is presented as part of a larger market- clearing macroeconomic framework, which is then estimated by a suitable subsystem estimator using annual data for the U.K., 1948- 1979. Taken on their own theory-consistent estimates of both labor supply and labor demand are obtained. The maintained hypothesis that the market clears cannot be tested againsta more general structural model within the framework presented; however, a test of the model against the data generation process suggests that the maintained hypothesis is untenable after 1966, which is confirmed by evidence of dynamic instability.