DP710 Was the Thatcher Experiment Worth it? British Economic Growth in a European Context

Author(s): Nicholas Crafts

Publication Date: August 1992

Keyword(s): Growth , Inequality , Thatcher , UK

JEL(s): I31 , O52

Programme Areas: Human Resources , Labour Economics

Link to this Page: www.cepr.org/pubs/dps/DP710.asp

The changes in economic policy introduced in the UK after 1979 had a substantial impact on income distribution, unemployment and productivity growth. This paper brings together available evidence in an attempt to evaluate the welfare effects of the Thatcher reforms. The estimated impact turns out to be sensitive to the degree of `inequality aversion' of the investigator and to the method chosen to estimate the counterfactual productivity path. The overall welfare effect may have been either negative or positive but is probably smaller than partisan assessments have claimed.