We argue that the effectiveness of Rwandan governments, both at implementing the 1994 genocide and inducing the current growth miracle, illustrates that the state has high capacity. Yet this capacity is not captured by conventional Weberian concepts, with their focus on taxation and formal bureaucracy. Rather, the capacity of Rwanda's state relies on its ability to leverage dense social networks which connect it to society. The origins of these networks lie in the construction of the historical state which expanded by merging with local lineages and kinship groups. Using data on the historical expansion of the Rwandan state as a proxy for the strength of state–society social networks we show they are uncorrelated with measures of Weberian state capacity. In a fieldwork exercise, we show that rule compliance today is positively correlated with our proxy, but uncorrelated with Weberian state capacity.

This article takes a short personal ‘helicopter ride’ over the main policy issues in the UK labour market, putting them into the context of the developments which have taken place in applied econometrics. We overview NIESR's role in the study of labour economics in postwar Britain and review some recent advances of importance in the current Institute research agenda.

The increase in unemployment in the United Kingdom that accompanied the Great Recession has been conspicuous by its moderation. The rise in joblessness is dwarfed by the recent experience of the United States, by past recessionary episodes in the UK and by the contraction in GDP in the UK. Increased rates of job loss have played a dominant role in shaping the rise in British unemployment. Unemployment duration has not increased to the levels seen in previous recessions, in contrast to the US where duration substantially exceeds previous peaks. Looking forward, the UK labour market appears to have adjusted fully to the shocks that prompted the recession. Signs of reductions in match efficiency witnessed recently in the US are not mirrored in the UK. In contrast, while long-term unemployment currently remains well below historical levels, recent estimates of job finding rates suggest that it has the potential to rise much further. Thus, a timely recovery in aggregate demand will play an important role in averting persistently high unemployment in the future.

The recession of 2008–9 inflicted a larger cumulative loss of UK output than any of the other postwar recessions. Nevertheless, employment rates remained higher than might have been expected given the experience of previous recessions. The main reasons for this appear to be a combination of high firm profitability levels going into the recession, supportive monetary and fiscal policies during the recession, reductions in real producer wages and relatively buoyant real consumer wages. Unemployment had reached its lowest levels for 30 years going in to the latest recession and has also remained relatively subdued through the downturn, certainly compared to previous recessions. A combination of lower inflow rates into unemployment, allied with a relatively higher outflow rate into employment underlie this. As government support for the economy is scaled back, it may be however that it will take a long time for employment to return to levels last seen before the recession.

The challenge for labour market policy in the new member states and other transition economies of Eastern Europe has been to redress the sharp drops in employment and rises in unemployment in a way that fosters the creation of productive jobs. This paper first documents the magnitude and productivity of job and worker reallocation. It then investigates the effects of privatisation, product and labour market liberalisation, and obstacles to growth in the new private sector on reallocation and its productivity in Hungary, Romania, Russia, and Ukraine. We find that market reform has resulted in a large increase in the pace of job reallocation, particularly that occurring between sectors and via firm turnover. Unlike under central planning, the job reallocation during the transition has contributed significantly to aggregate productivity growth. Privatisation has not only stimulated intrasectoral job reallocation, but the reallocation is more productive than that among remaining state firms. The estimated effect of privatisation on firm productivity is usually positive, but it varies considerably across countries. The productivity gains from privatisation have generally not come at the expense of workers, but are associated rather with increased wages and employment.

The aim of this paper is to examine, both at partial and general equilibrium, the consequences of work sharing policies, when the wages, the length of the working time and the participation rates are endogenous, in an economy where workers get utility from leisure. It is shown that the effects of a shorter working time are very different at the firm level and at the aggregate level. At a steady state, a decrease in working-time is likely to increase employment at the firm level, but reduces employment and welfare at the aggregate level.