Working Paper no. 160
By Brian Bell and James Smith
Empirical studies of worker flows in the United States and Europe have found that these flows are large when compared with the change in the stocks of employment and non-employment and have a distinct cyclical pattern. In the United Kingdom, studies of this kind have been hampered by limitations in the available data. In this paper we make use of newly released longitudinal data from the Labour Force Survey. We show that on average since 1993, 7.3% of those in the working-age population have changed labour market state in a given three-month period. This compares with a consistently calculated annual figure of 12.5%. In addition, we present an array of evidence to show that UK gross flows appear to follow a similar cyclical pattern to those found in other countries. We also present evidence on the potential problems that previous research may suffer from with their use of recall data to determine prior labour market status. While stocks are similar using recall or recorded labour market state, flows inferred from recall data are severely biased by recall error.