Quarterly Bulletin
Employment Articles
| 2007 Q1 | Potential employment in the UK economy  (670k)(By Richard Barwell, Venetia Bell and Philip Bunn of the Bank's Monetary Analysis Division, and Maria Gutiérrez-Domènech formerly of the Bank's Monetary Analysis Division). This article discusses a range of factors that may shift the level of UK potential employment - that is, the amount of labour that can be sustainably employed by UK companies to produce goods and services. The level of potential employment reflects four factors: the size of the adult population; the willingness of that population to participate actively in the labour market; the sensitivity of wages to the unemployment rate; and the average number of hours that people are willing to work when employed. Rapid growth in the UK population has been the primary source of growth in potential employment over the past ten years. Structural changes in the labour market are likely to have also enabled a modest increase in the equilibrium participation rate and a decline in the equilibrium unemployment rate which would have further boosted potential employment. But those developments have been partly offset by the continued downward trend in desired working hours. |
| Spring 2004 | Measuring
total factor productivity for the United Kingdom
(99k) (by Charlotta Groth, Maria Gutierrez-Domenech and Sylaja Srinivasan of the Bank's Structural Economic Analysis Division). A good understanding of productivity growth is important for understanding aggregate supply capacity, and so for the conduct of monetary policy. To understand the sources of supply capacity well, it is important to measure output and factor inputs correctly. This article summarises recent and ongoing research at the Bank of England on improved measures of factor inputs. This work explicitly accounts for changes in the quality of these inputs and for the flow of services available from them, as well as for the costs of adjusting the level and utilisation of the inputs over time. This research was presented at a workshop on 'measuring factor inputs' held at the Bank of England in December 2003. |
| Autumn 2003 | Non-employment
and labour availability
(116k) (by Jerry Jones, Michael Joyce and Jonathan Thomas of the Bank's Structural Economic Analysis Division). According to the Labour Force Survey, about 20% (approximately 7.5 million) of the non-student working-age population were not in paid employment in 2002. Of these people about one in five were classified as unemployed, with the remainder labelled as 'inactive'. Despite this categorisation, however, some groups in the so-called inactive population are as likely to move into employment as those classified as unemployed, so any comprehensive measure of labour availability needs to incorporate information on the characteristics of the non-employed pool as a whole. This paper describes the key trends in the demographic and skill structure of the non-employed population since the mid-1980s and contrasts them with those in employment. It also attempts to draw out the implications of these trends for overall labour availability, building on recent Bank research which models individual transition rates from non-employment into employment. |
| Summer 2003 | Assessing
the extent of labour hoarding
(103k) (by Guillermo Felices of the Bank's Structural Economic Analysis Division). The strength of employment during the recent slowdown is sometimes taken as evidence of labour hoarding. But the extent of such hoarding is difficult to measure. This article reviews different definitions of labour hoarding and a variety of ways of measuring it using aggregate data. Most of these measures indicate that labour has been underutilised during the recent slowdown, implying that firms have indeed hoarded labour to some extent. However, the magnitude of the reduction in utilisation differs across these measures. The evidence also suggests that the recent decrease in utilisation has been limited compared with previous episodes in which labour utilisation was significantly below trend. |
| Winter 2002 | Estimating
the impact of changes in employers' National Insurance Contributions
on wages, prices and employment
(70k) (by Brian Bell, Jerry Jones and Jonathan Thomas of the Bank's Structural Economic Analysis Division). This article explains how changes in payroll taxes might affect real wages and employment. It then estimates the responses of relative wages, prices and employment to the changes in employers' National Insurance Contributions (NICs) that occurred in 1999. The empirical evidence is based on industry-level data and exploits valuable variation in the extent to which these changes in the payroll tax affected different industries. |
| Summer 2002 | Working
time in the United Kingdom: evidence from the Labour Force
Survey
(126k) (by Fergal Shortall of the Bank's Structural Economic Analysis Division). This article examines the evolution of working time from a macroeconomic perspective using data from the Labour Force Survey. Average hours worked are still falling, after abstracting from the effects of overtime. This can largely be accounted for by the rise in the proportion of part-time workers. Above and beyond the full-time/part-time split, changes in employment composition by industry, gender, occupation, employment status and age explain little of the downward trend in average hours worked. Overtime has shifted from being paid towards being unpaid. Changes in the occupational mix can account for some of this shift. The article shows that paid overtime is the only component of hours with strong cyclicality. All other components lag GDP and in some cases lag employment too. This is consistent with aggregate changes in hours being the result of compositional effects, rather than employees in the same job changing their hours. |
