Introduction

One of the things that struck me most in reading the studies prepared for this volume – as it had in listening to the discussion at the conference at which the papers were originally presented – was the lack of consensus among their authors concerning the appropriate orientation for an investigation of labour market mismatch. In their overview study (Chapter 2 in this volume), Jackman, Layard and Savouri (hereafter JLS) argue that researchers interested in mismatch ought to direct their efforts toward understanding the persistent differences in the unemployment rate across skill groups and regions. This orientation leads them to focus on labour market equilibrium, and the factors that affect it, with rather little attention given to labour market dynamics. In contrast, most of the individual country studies are concerned more directly with the question of whether, and how, labour market adjustment problems have contributed to the increases in those countries' unemployment rates during the 1970s and early 1980s. This latter orientation leads these authors to focus on a variety of issues related to changes in the labour market and the dynamics of labour market adjustment.

While both sets of issues are clearly important, I cannot say that the existence of persistent cross-group unemployment rate differentials strikes me as especially surprising. Differences in unemployment rates across skill groups, for example, are easily rationalised in terms of differential rates of investment in firm-specific human capital that produce different degrees of attachment to particular jobs. Similarly, persistent differences in unemployment rates across regions can be explained in terms of differences in industrial structure and in local amenities.