U-form
The unitary form of business enterprise organized in the traditional way of dividing it up according to function. This is an appropriate structure for smaller enterprises; for larger organizations, a u-form imposes high communication costs.
U hypothesis
A view of the income distribution of less developed countries advanced by kuznets and others that the share of national income going to the poorest part of the population declines at the start of economic development and rises only in the later stages of development, often because of a change in government policies to help the poor. The income distribution often changes over time in this way because development has taken the form of industrialization of benefit to only a small part of the economy.
UK economic forecasting
The work of organizations that regularly produce detailed independent forecasts of the UK economy. Apart from the Treasury and the bank of England, forecasting is also undertaken by Henley Forecasting, the NATIONAL INSTITUTE OF ECONOMIC AND SOCIAL research, London Business School, Liverpool university, oxford Economic Forecasting, the confederation of British industry, Goldman Sachs and the OECD.
UK gilts market
Market in UK government bonds. About 150 government securities are traded in this market. After the London market was deregulated twenty-nine primary dealers established themselves in the market, using the USA as a model: with this number of dealers no firm will have a vital proportion of the market. The central Gilts office acts as the clearing house for transactions in gilts.
UK taxation
A mixture of taxation on households (income tax and national insurance contributions), on firms (corporation tax), on wealth (capital gains and capital transfer taxes) and on goods and services (VAT and excise duties) with offsetting allowances at the national level. Local government currently has the revenue from the council tax and uniform business rate. Recent statistics indicate both the relative yield of these taxes and the switch from direct to indirect taxation since 1979.
umbrella fund
A fund set up abroad to evade restrictions on investment imposed by a domestic government.
Umbrella Group
The negotiating group of non-Eu developed countries at climate conferences consisting of Norway, Russia, the USA, Canada, Japan, Australia, New Zealand and switzerland.
unbiased estimator
A parameter of a population that is the same as the corresponding statistic for a sample taken from it, e.g. the arithmetic means are the same.
unbundling
1 The separate charging for the services provided by a bank or other financial institution.
2 A de-merger which involves the selling off of the component parts of a firm.
uncertainty
A state of affairs with an unknown outcome not subject to a probability distribution. in economics, there are many states of uncertainty, e.g. of demand, of returns to investment. uncertainty imposes many costs, e.g. the holding of higher inventories to safeguard against an irregular supply of raw materials and components. The forms of uncertainty are as various as its determinants – competition, technological change, the business cycle and change of government or governmental policies.
unconditional grant
Australian federal grant to an individual state which is a means of sharing tax revenues to provide public services at the same level throughout Australia. As the use of these grants is not stipulated, it is possible for them to be used to reduce taxes rather than to maintain services.
uncovered interest parity
The assertion that domestic interest rates will equal foreign interest rates when converted into the domestic currency, given that investors are risk neutral and capital controls are absent.
UNCTAD Liner Code
The set of rules of UNCTAD allowing shipping conferences to fix cargo rates and to share out routes between the ports of UNCTAD members.
undepletable externality
An externality with collective effects so that if one person is affected by it the effect on others will not be diminished, e.g. smog.
underemployment
Work with a low productivity, e.g. agricultural labour on small farms; part-time employment of workers who want fulltime jobs. The extent of underemployment is reflected in low wages and in a lower output per person than that of workers in the most efficient enterprises of that industry. Much underemployment occurs in the secondary sector of the labour market.
underground banking
A way of transferring money that disguises the transaction; often used for laundering money. To effect a secret transfer from X to Y, x deposits the money with a banker who then asks a third party to give that amount of money to Y. This type of banking has been practised for centuries in the Middle East and Asia, especially in India where it is known as hawala. It requires much trust in the banker.
underground economy
The economic activities of a nation not officially recorded and sometimes illegal.
underlier
The asset delivered under a derivative instrument contract. For example, for a wheat futures contract, wheat is the under-lier. Also an underlier can be a market variable (such as an interest rate or security price) for derivatives settled in cash.
underlying inflation rate
The adjusted retail price index with seasonal food prices, the council tax and mortgage interest payments removed.
undertrading
operating a firm with excess capacity because of a low demand for its products.
underwater stock option
An option whose exercise price is more than the current market price.
underweight on a share
Possessing a holding of a stock market security below the desired amount.
underwriter
1 A financial institution promising to take up the unsold shares of a new issue.
2 An insurance company or lloyd’s syndicate which accepts an insurance risk.
unemployment
1 The state of being part of a labour force, wanting to work, but without a job.
2 A disequilibrium phenomenon arising from inflexible prices.
Unemployment can take many forms - VOLUNTARY, INVOLUNTARY, FRICTIONAL, STRUCTURAL. It has been measured both as a stock and as a flow, using as statistical sources registers of persons declaring themselves to be unemployed and household surveys. In classical economics, unemployment is viewed as a temporary phenomenon until price flexibility restores an economy to full employment. keynes challenged the classical view and later economists have been sceptical about the clearing of markets.
unemployment causes
A method of classifying the types of unemployment, based on the theory of employment held by a particular labour economist. classical economists, with their belief that all markets ultimately clear, believed that unemployment was a short-term phenomenon of a frictional type; if it was longer it could be attributed to a change in the structure of industry. keynes insisted that unemployment could be involuntary, as a consequence of a deficiency in demand. Thus, it became popular to classify unemployment as frictional or structural. The rapid pace of technological change and the growth of welfarism in many countries in the post-1945 period suggested new causes of unemployment. changes in the relative cost of capital and labour and the relationship between the level of unemployment benefits and the pay of jobs at the bottom of the earnings league have also been noted as causing unemployment.
unemployment compensation
A welfare payment to unemployed people often based on an insurance scheme. This benefit is a usual provision in developed countries, but it is as rare in developing countries as it was in the soviet-type economies. in those countries offering this form of compensation, payments have become more generous over time: after 1973, the unemployment benefit rate reached 75 per cent of after-tax incomes in major European countries.
unemployment spell
A completed period of unemployment. spells are likely to be longer at higher levels of benefit, when workers have savings and when the overall rate of unemployment is high. The number of spells has been increasing in both the us and uK labour markets.
unemployment statistics
Data on the total numbers within a country’s labour force without a job but seeking employment. it is customary to subdivide this information by sex, age, industry, occupation and duration of unemployment. European unemployment statistics are regularly published in the Eurostats Labour Force survey; us statistics are published by the Bureau of Labor Statistics (USA); and UK statistics by the Department for Education and Employment (uK). Governmental bodies charged with the task of collecting these data constantly attempt to refine their definition of unemployment to obtain a more accurate measure: by doing so, they invite the accusation that they are distorting the figures. in the uK, for example, there were fifteen changes in the statistical conventions used in the period 1979-86 which some critics have claimed illegitimately reduced the numbers unemployed by 400,000.
unemployment trap
The barrier to employment caused by unemployment benefits. if these benefits are greater than the wages of low-paid workers, job search and accepting jobs are often discouraged. The extent of this trap is measured by the ratio of benefits to income, the replacement ratio.
unequal exchange
Trading which is systematically biased against one party because of a movement in the net barter terms of trade or because of an unequal distribution of productive assets.
unfair labour practice
conduct of an employer or an employee attracting penalties under labour relations legislation. it was possible for employers to commit such practices under the National Labor Relations Act (wagner act) of 1935 in the USA; in 1947, the taft-hartley act extended this to us labor unions also. The short-lived Industrial Relations Act of 1971 in the UK made use of this concept.
uniform business rate
UK property tax on businesses levied at the same rate throughout England from April 1990, with separate Scottish and Welsh business rates, to replace business rates previously fixed by local authorities. By making this form of local taxation uniform, rates rose in the more prosperous south of England and fell in the less prosperous north. Transitional arrangements over a five-year period cushioned the effects of the change.
Uniform Commercial Code
A legal code enacted in 1952 in Pennsylvania and then copied, with some variations, by all other US states and territories except Louisiana and Puerto Rico. It provides a flexible approach to the formation and performance of contracts.
uniformity assumption
Chamberlin’s assumption that under monopolistic competition each firm of an industry has identical cost and demand curves.
uniform price
A price that is the same for all groups of consumers because no price discrimination is being practised.
unimodal distribution
A distribution of numbers with only one MODE.
unintended investment
Investment that occurs despite not having been planned. it chiefly takes the form of an accumulation of stocks (inventories) because sales are less than predicted.
Union Douaniere et Economique de l’Afrique Centrale
A customs union with a common central bank set up in 1966 between cameroon, the central African Republic, the congo and Gabon.
unionization
The proportion of a labour force in membership of trade (labor) unions. Unionization varies greatly from country to country, being very high in scandinavia, israel and Eastern Europe but low in the USA. Between regions of a country it varies because of differences in the industrial structure and in state laws if the country has a federal constitution (e.g. in the USA, southern states with ‘right-to-work’ legislation have lower levels of unionization). Unionization is higher in most large and oligopolistic firms as the marginal cost of recruiting an extra member is lower there than in scattered small firms. Before the growth of white-collar trade unions it was thought that technical change would reduce unionization and also that increases in female labour force participation would reduce overall participation. These fears have not been entirely fulfilled. However, the pattern of increasing unemployment, particularly the decline of heavy industries with many manual jobs, has reduced overall unionization. Unionization is also known as union density.
Union of National Economic Associations in Japan
Founded in 1950 as the only nation-wide Japanese federation of associations of scholarly economics, commerce and business administration organizations. its thirty-five groups include societies for accounting, agricultural economics, economic sociology, economic geography, the history of economic thought, planning, public utility economics and socialist economies. It is based at Waseda University, Tokyo.
union shop
A firm which requires all employees within a short specified time of taking up employment to be members of a us labor union recognized as having collective bargaining rights in that firm,. The US equivalent of the UK post-entry closed shop. The looser meaning of a union shop is a workplace with unionized workers.
union threat model
An economic model which shows that employers pay above the market rate to discourage unions from recruiting workers into membership.
union wage effect
The difference between the wages of unionized and non-unionized workers. In the figure, the union raises wages from W0 to Wi by restricting employment to Ni. As the principal concern of unions is wage negotiations, this effect is an indicator of their success. us studies suggest that the effect is about 30-40 per cent when union and non-union wages are compared. The effect is larger for young than for older workers, for non-whites than for whites. it is greater in industries with monopoly power and in sector-wide bargaining. It was greater in the interwar depression, and in the late 1970s, because the unionized sector could fight wage cuts. in the uK, the effect is measured by comparing wages under collective bargaining agreements with those elsewhere in the economy: the effect can vary from 10 to 25 per cent. pure union wage effects are difficult to measure as there may be a difference in the quality of unionized and non-unionized workers.
union wage policy
The course of action of us labor or trade unions in wage negotiations, usually with the aims of obtaining the same pay for the same job within an establishment and the equalization of pay for similar workers across establishments. dunlop treated the union as a firm with the overall aim of maximizing the total wage bill of its members – a view regarded as too simplistic by Ross who encouraged labour economists to examine more facets of union behaviour in collective bargaining. The greatest achievement of union wage policy is the standardization of wage rates for workers in the same occupational group, thus preventing labour from competing against itself.
unipolar concentration
The build-up of the principal economic activities of a country in one centre, as, for example, in the Tokyo area. This concentration takes advantage of economies of scale, economies of scope and of regional specialization.
unitary elastic
Elasticity equal to +1. If a demand curve is of this elasticity throughout, then it will take the shape of a rectangular hyperbola. over the part, or whole, of a demand curve of unitary elasticity, there will be constant total revenue associated with each point on the curve because the percentage change in quantity demanded will be matched by a percentage change in price of the same magnitude in the opposite direction.
unit banking
A domestic banking system with single banks each operating from only one location. US retail banking was originally of this form but gradually in the twentieth century branch banking throughout a county or a state was permitted and bank holding companies were permitted.
unit cost
The cost of producing one unit of a product. This is calculated as the average cost of producing a batch or a standard unit for that type of production, e.g. a topic or a barrel of beer, or the marginal cost of producing the last unit.
United Nations Conference on Trade and Development
An organ of the General Assembly of the United Nations with the aim of improving the trade of less developed countries, particularly through international commodity agreements. After its first meeting in 1964, it has met subsequently in 1968, 1972, 1976, 1979, 1983 and 1987; all members of the United Nations and its specialized agencies belong to it.
its efforts have been less than successful: in the 1980s, international agreements on rubber, coffee, cocoa and tin were incapable of protecting Third World countries from falls in prices and the great increase in their foreign debts. The tin agreement failed in 1985 with the bankruptcy of the buffer stock; coffee producers found it increasingly difficult to come to an agreement. success is unlikely until developed countries reflate their economies to provide bigger markets for primary products and less developed countries diversify their economies.
United Nations Development Programme
A United Nations organization formed in 1965 to render technical assistance to developing countries. it undertakes the work previously done by the UN Expanded Programme of Technical Assistance and the UN Special Fund. It offers soft loans for development.
United Nations Framework Convention on Climate Change
A set of principles formulated at the Earth Summit in Brazil in 1992. It concentrated on climate change attributable to human activity and recommended precautionary measures to anticipate this change. The parties to the agreement were expected to promote sustainable development, especially by reducing carbon dioxide emissions.
United Nations Industrial Development Organization
A vienna-based organization created in 1967 to promote Third World industrialization by advising on industrial strategy and evaluating projects.
unitization
The division of real property into tradable portions to provide a new form of investment. Thus a large building can be sold in portions which are regularly traded like shares in companies.
unit of account
A medium of account used as a measure or standard of value because of the stability of its value. Hard currencies are particularly used for this purpose.
unit pricing
Quoting prices per unit of weight, e.g. X cents per ounce (or gram), so that goods produced in different standard sizes can be compared.
unit tax
A tax per unit sold usually taking the form of a sales or purchase tax.
unit trust
A trust that purchases stock exchange securities and sells unit portions of the portfolio acquired to the general public. Many unit trusts have specialized portfolios, concentrating on property shares or securities of a particular country, on the yield of a portfolio or the rate of growth of its capital value. The trust managers charge the unit holders for their investment management. This investment device, introduced in the UK from the USA in 1931, is attractive to the small investor as a means of diversifying risk.
unit value index
A price index calculated by dividing the total value of a good by the total quantity of it. since technical progress involves the substitution of light goods for heavy goods, unit value indices underestimate the magnitude of price changes.
universal banking
1 World-wide provision of financial services by one bank.
2 Provision of banking facilities for a whole population.
3 A large bank, or a post office, with an extensive branch network. 4 A bank offering a broad range of financial services, including retail banking, corporate banking and treasury operations.
Unlisted Securities Market
The second tier of the London stock Exchange, created in November 1980, to enable directors unwilling to apply for a full listing on the exchange to deal in their company’s shares. For a listing on the usM a company needs a three-year record of successful business and the directors must sell at least 10 per cent of the company, whereas for a full listing the company needs a five-year record and a minimum sale of 25 per cent. in 1980 thirty-five companies were given a listing on the USM; in 1985 ninety-eight companies joined; about 350 companies were listed by 1987. The attraction of a listing on this market is the lower cost compared with being listed on the exchange. in the first five years of its existence, the usM raised £882.6 million. It was succeeded by the Alternative Investment Market in 1995.
unpaid work
productive employment without remuneration that occurs within households and family-owned businesses. such work is broadly defined as any activity which is perceived to produce utility, satisfying either market or non-market needs. it is measured by its opportunity cost and is usually excluded from national accounts calculations of output, excepting in the case of work on family farms. children are often ordered to do this kind of work; adults out of moral obligation often become unpaid carers.
unreported sector
That part of a national economy that evades government statisticians and is largely untaxed.
upcoding
A device to obtain higher medical or other professional fees by exaggerating the seriousness of the condition being addressed.
upper quartile
The value of a set of numbers such that three-quarters of the numbers are lower in value. This is often used in the study of income distributions. The seventy-fifth PERCENTILE.
upselling
selling an extra item allied to the original purchase, e.g. selling a side dish to a main course in a restaurant.
upstream firm
A firm engaged in an early stage of production; for example in the case of the oil industry, before refining is done.
urban economics
The study of land use, location decisions and the growth of cities and towns. This broad subject encompasses the economic dimension of all activities in urban areas, including industry, housing, crime and poverty.
Uruguay Round
The GATT negotiations of 1986-91 with 92 participant countries. The principal features of this round were an attempt to reduce the protectionism of developed countries, without full reciprocity from less developed countries, and to reduce US and european community subsidies to agriculture thereby cutting surpluses and making world agricultural markets work more smoothly. This is the first time a policy to deal with agricultural products has been the subject of GATT negotiations – even reductions in agricultural sanitary regulations have been proposed as they can act as a barrier to trade. Trade-related investment, intellectual property rights and trade services were also covered.
user charge
1 A charge per quantity of an emission discharged into a sewerage system.
2 A charge for a service provided by a central or local government or by a public enterprise, e.g. a ticket for admission to a swimming pool. These charges are based on the average cost or marginal cost of providing the service.
user cost
1 The cost of capital depreciation attributable to one unit of output.
2 The price a firm should pay for using its own capital stock.
US federal finance
Finance raised by taxes and borrowing to finance the activities of the federal government of the USA. The power to tax is derived from Article 1, section 8, of the US Constitution that gives the Congress power to levy and collect taxes and duties in order to pay debts and provide for common defence and the general welfare of the USA. This article also requires that the rates of taxation should be uniform throughout the states of the union. Most of tax revenue at the federal level comes from the individual income tax and is used both to finance federal expenditures and to give grants to state governments.
U-shaped frequency curve
A frequency curve in the shape of the letter ‘U’ with maxima at both ends of it.
US labor union
A voluntary association of employees with the major aim of collective bargaining for improvements in wages and other conditions. These are either local unions (restricting membership to a local area) or international unions (covering the whole of the USA). Although unions have existed in the USA for 200 years, they have not achieved the same levels of unionization as in many other countries, including the uK, partly because of the anti-union legislation in some of the southern states.
US Trade Representative
An office set up in 1963 as part of the Executive office of the us president to direct trade negotiations and formulate trade policy. it now operates under the authority of the omnibus Trade and Competitiveness Act 1988.
US Treasury bond market
us bond market consisting until 1986 of only thirty-five primary dealers. Its daily dealings of $100 billion or more make it one of the most influential financial markets in the world, as do the prices it sets of us Treasury bonds which influence the cost of capital throughout the world because of the importance of the dollar. Entry to the market is difficult. As a dealer must have 0.75 per cent of daily turnover, excluding trades among dealers, to qualify, entry means either attracting business away from existing dealers or purchasing an existing dealer, as some uK and other banks are now attempting. The margins have to be very small, sometimes as low as 1/64 of a point, to be competitive.
US Treasury market
us securities market in which 35,000 different bonds, bills and notes issued by governmental agencies are traded. Dominant in the market is the Federal Reserve Bank of New York that does 25 per cent of the clearing.
usury
An exploitative rate of interest; formerly the term for ‘the rate of interest’ as the Judaic, islamic and christian religions condemned any rate of interest as wrong. usury laws were common either to outlaw the charging of interest or to impose a ceiling rate. Economists as far back as the mercantilists realized that a maximum rate of interest is often unenforceable. There are still laws in the UK and USA governing the maximum rate of interest that money lenders can charge. usury is a major issue in islamic banking today.
util
one unit of satisfaction. if it were possible to measure cardinal utility then the amount of satisfaction would be expressed in utils. Most economists have regarded it as impossible to count utils as utility is a subjective valuation.
utilitarianism
An approach to moral philosophy popularized by bentham and originally devised by Beccaria and Helvetius and later used by Godwin and John Stuart mill. It is concerned to show that the rightness of an action is to be judged by its consequences in terms of pain and pleasure, using a ‘balance sheet’ approach to see whether there is a net advantage. The goal of utilitarians is to achieve ‘the greatest happiness for the greatest number’. critics of utilitarianism have pointed out the difficulties of reducing values to utilities and of aggregating the happiness of individual persons.
utility
The satisfaction derived from an activity, particularly consumption. The total amount of such satisfaction is total utility; the satisfaction from the last unit is marginal utility. bentham in his suggested calculus of pleasure and pain was influential in introducing this notion into economics but the marginalists were the first economists to make it the central concept of economic theory. The measurement of utility has provoked long debates between cardinal utility (utility measured in units) and ordinal utility (utility revealed through preferences). without this concept, much of neoclassical economic theory would not be possible. Earlier economic writers, especially those of the classical school, used ‘utility’ in the objective sense of the inherent worth of something.
utility function
This is generally expressed in the form U = f(x1, x2, x3, x4, x5, …). It shows a consumer’s utility as a function of the quantities of goods and services 1, 2, 3, 4, 5, . . . he or she consumes.
utility possibility frontier
This connects the pareto-efficient combinations of the utilities of two individuals. A movement from B to A is Pareto efficient as both Adam and Eve are better off; a movement from A to c increases Eve’s utility but reduces Adam’s.
utopia
An ideal state suggested in Plato’s Republic and Thomas More’s Utopia. In subsequent centuries many socialists, including owen and fourier, devised utopian community schemes. Many utopias attempt to minimize the amount of work and division of labour in favour of an egalitarian existence conforming to a regimented lifestyle.
