Long-term unemployment and the great recession: evidence from UK stocks and flows

Long‐term unemployment more than doubled during the United Kingdom's Great Recession. Only a small fraction of this persistent increase can be accounted for by the changing composition of unemployment across personal and work history characteristics. Through extending a well‐known stocks‐flows decomposition of labour market fluctuations, the cyclical behaviour of participation flows can account for over two‐thirds of the high level of long‐term unemployment following the financial crisis, especially the procyclical flow from unemployment to inactivity. The pattern of these flows and their changing composition suggest a general shift in the labour force attachment of the unemployed during the downturn

The public-private sector wage differential in the UK: evidence from longitudinal employer-employee data

If fiscal policy exerts pressure on public services, then attention often falls on the public-private sector wage differential. Estimated with longitudinal employer-employee data for the years 2002-16 in the United Kingdom, among men there was no significant public sector wage premium. However, women received an average 4% premium compared with working in private sector firms

Gender and the business cycle: an analysis of labour markets in the US and UK

Starting from an improved understanding of the relationship between gender labour market stocks and the business cycle, we analyse the contributing role of flows in the US and UK. Focusing on the post 2008 recession period, the subsequent greater rise in male unemployment can mostly be explained by a less cyclical response of flows between employment and unemployment for women, especially the entry into unemployment. Across gender and country, the inactivity rate is generally not sensitive to the state of the economy. However, a flows based analysis reveals a greater importance of the participation margin over the cycle. Changes in the rates of flow between unemployment and inactivity can each account for around 0.8-1.1 percentage points of the rise in US male and female unemployment rates during the latest downturn. For the UK, although the participation flow to unemployment similarly contributed to the increase of the female unemployment rate, this was not the case for men. The countercyclical flow rate from inactivity to employment was also more significant for women, especially in the US, where it accounted for approximately all of the fall in employment, compared with only 40% for men

Unemployment and econometric learning

We apply well-known results of the econometric learning literature to the Mortensen-Pissarides real business cycle model. Agents can always learn the unique rational expectations equilibrium (REE), for all possible well-defined sets of parameter values, by using the minimum-state-variable solution to the model and decreasing gain learning. From this perspective the assumption of rational expectations in the model could be seen as reasonable. But using a parametrisation with UK data, simulations show that the speed of convergence to the REE is slow. This type of learning dampens the cyclical response of unemployment to small structural shocks

Segregation and gender gaps in the United Kingdom's great recession and recovery

This article assesses the role of segregation in explaining gender employment gaps through the United Kingdom’s Great Recession and its subsequent period of recovery and fiscal austerity. The analysis reaffirms that gender employment gaps in the UK respond to the business cycle, and it evaluates to what extent these short-term changes in the employment gap can be explained by the industry sectors and occupations where women and men work. A counterfactual analysis accounts for the specific role of combined gender segregation across industry sectors and occupations that existed at the onset of the Great Recession. The results contradict the existing narrative that men’s employment was more harshly affected than women’s employment; segregation accounts for over two and a half times the actual fall in the gender gap between 2007 and 2011

The age-wage-productivity puzzle:Evidence from the careers of top earners

There is an inverted u-shaped relationship between age and wages in most labour markets, but the effects of age on productivity are often unclear. We use panel data in a market of high earners, professional footballers (soccer players) in North America, to estimate age-productivity and age-wage profiles. We find stark differences; wages increase for several years after productivity has peaked, before dropping sharply at the end of a career. This poses the question: why are middle-aged workers seemingly overpaid? We investigate a range of possible mechanisms that could be responsible, only finding evidence that tentatively supports a talent discovery theory

Empirical essays on recent patterns in the British labour market

This thesis presents three essays, which each address a salient recent pattern in the British labour market. The first essay concerns whether or not men and women experience the business cycle differently, through their labour market outcomes, and why this might be the case. The second essay seeks to explain the cyclical amplification of unemployment duration, in particular the substantial and persistent increase in UK long-term unemployment observed during and since the Great Recession. The final essay studies recent changes in British wage inequality. To shed light on the possible factors driving these changes, it asks simply whether they are mostly determined by increasing or decreasing wage dispersion within or between firms. Gender and the business cycle: an analysis of labour markets in the US and UK Starting from an improved understanding of the relationship between gender labour market stocks and the business cycle, we analyse the contributing role of flows in the US and UK. Focusing on the post-2008 recession period, the subsequent greater rise in male unemployment can mostly be explained by a less cyclical response of flows between employment and unemployment for women, especially the entry into unemployment. Across gender and country, the inactivity rate is generally not sensitive to the state of the economy. However, a flows based analysis reveals a greater importance of the participation margin over the cycle. Changes in the rates of flow between unemployment and inactivity can each account for around 0.8-1.1 percentage points of the rise in US male and female unemployment rates during the latest downturn. For the UK, although the participation flow to unemployment similarly contributed to the increase of the female unemployment rate, this was not the case for men. The countercyclical flow rate from inactivity to employment was also more significant for women, especially in the US, where it accounted for approximately all of the fall in employment, compared with only forty percent for men. Long-term unemployment and the Great Recession: evidence from UK stocks and flows Although modest by historical standards, long-term unemployment nonetheless more than doubled during the UK’s Great Recession. Only a small fraction of this persistent increase can be accounted for by the changing composition of unemployment across personal and work history characteristics. Through extending a well-known stocks-flows decomposition of labour market fluctuations, the cyclical behaviour of participation flows can account for over two-thirds of the high level of long-term unemployment following the financial crisis, especially the procyclical flow from unemployment to inactivity. The pattern of these flows and their changing composition suggest a general shift in the labour force attachment of the unemployed during the downturn. Recent changes in British wage inequality: evidence from firms and occupations Using a linked employer-employee dataset, we study the increasing trend in British wage inequality over the past two decades. The dispersion of wages within firms accounts for the majority of changes to wage variance. Approximately all of the contribution to inequality dynamics from firm-specific factors are absorbed by controlling for the changing occupational content of wages. The modest trend in between-firm wage inequality is explained by a combination of changes in between-occupation inequality and the occupational composition of firms and employment. These results are robust to using weekly, hourly or annual measures of employee pay