Estimates of the asset-effect: The search for a causal effect of assets on adult health and employment outcomes

In this paper we seek to determine the effect of assets held in early adult life on later outcomes. We specifically look at wages, employment prospects, general health and Malaise. The identification of an asset-effect throws up a number of statistical challenges as asset holding is not random. We employ a number of statistical techniques in our search for the causal effect of assets on adult health and employment outcomes. We find that simple Ordinary Least Squares and probit estimates of the asset effect are indeed biased in many cases. However, after applying a battery of techniques to remove such biases, the conclusion is that within the cohort examined (born in 1958), early asset holding does have positive effects on later wages, employment prospects, excellent general health and in reducing malaise.asset effect, wealth, asset-based welfare

Assimilation of Migrants into the British Labour Market

This paper discusses the extent to which migrants to Britain have been assimilated into the workforce. Migration into Britain has increased over the last 25 years, with a big increase in inflows in recent years. The paper shows that when a migrant worker first arrives they experience a pay gap with native born counterparts of over 30% for men and 15% for women. This pay penalty declines with years spent in Britain. For migrant men it takes 20 years to eradicate this difference. For migrant women just 4-6 years. Different nationalities experience different rates of assimilation, with Europeans catching up the fastest but Asian men showing little signs of catching up at all. More recent entry cohorts of migrants have fared better but this is largely because they enter with a smaller pay penalty rather than experience faster wage growth.migration, labour markets, assimilation

The Impact of Policy Change on Job Retention and Advancement

This paper examines the impact of the Working Families Tax Credit (WFTC) on employment retention and advancement. The WFTC, which replaced Family Credit in October 1999, supplemented earnings of low paid workers living in low income families. It was designed to increase the financial incentive for low skilled workers to find and remain in work and in the process boost their family income. It finds evidence that WFTC increased employment retention among male recipients. WFTC does not appear to have increased wage growth compared with Family Credit but there is no evidence that employers were able to use the more generous WFTC to keep wage growth down.labour market, welfare reform, job retention

Assimilation of migrants into the British labour market.

This paper discusses the extent to which migrants to Britain have been assimilated into the workforce. Migration into Britain has increased over the last 25 years, with a big increase in inflows in recent years. The paper shows that when a migrant worker first arrives they experience a pay gap with native born counterparts of over 30% for men and 15% for women. This pay penalty declines with years spent in Britain. For migrant men it takes 20 years to eradicate this difference. For migrant women just 4-6 years. Different nationalities experience different rates of assimilation, with Europeans catching up the fastest but Asian men showing little signs of catching up at all. More recent entry cohorts of migrants have fared better but this is largely because they enter with a smaller pay penalty rather than experience faster wage growth.

The changing pattern of earnings: employees, migrants and low-paid families

Richard Dickens and Abigail McKnight explore changes in earnings inequality in Britain since the late 1970s.

The Economic Basis of Social Class

In this paper we adopt a theory of class positions based on employment relations to assess what implications individuals¿ class positions have for their economic life. In particular we consider economic security (the risk of unemployment), economic stability (the variability component in earnings) and economic prospects (lifetime earnings profiles). Our findings provide empirical support for the theory itself and little evidence for the currently fashionable claims of the decline, or even death, of class in today¿s society.social class, relations and conditions of employment, lifetime earnings, employment stability, employment security

A fresh look at an old question: is pro-poor targeting of cash transfers more effective than universal systems at reducing inequality and poverty?

This paper presents findings on the changing effectiveness of cash transfers and income taxes on inequality and poverty reduction in four EU countries - the UK, Italy, Sweden and France. We use long time series (spanning four decades) to examine trends within countries over time and between countries at different points in time. Recent evidence has suggested that the relationship between concentration of cash transfers and their redistributive effectiveness has become blurred over time. We find much more conclusive evidence of a negative relationship within countries over time. The results show a negative relationship between the concentration of cash transfers net of direct taxes and their effectiveness in terms of reducing poverty and inequality. The strength of the relationship varies between countries and in some cases between the all age and the working age populations. The evidence suggests that caution should be applied to relying on bivariate cross-country estimates and that more should be done to establish and verify empirical relationships within countries over time using the rich data sources that are now available. These findings re-open the debate on the most effective design of cash transfer and direct tax systems

Understanding the relationship between poverty, inequality and growth: a review of existing evidence

This paper reviews the theoretical literature and empirical evidence on the relationship between poverty, inequality and economic growth. It finds evidence that economic inequality is good for growth as well as new convincing evidence that inequality is bad for growth. Variation in data quality, methodologies, the range of countries included in different studies makes it difficult to compare the evidence. A recent hypothesis that the relationship between inequality and growth might be non-linear, with very low and very high levels of inequality being harmful to growth but a range in between where the relationship is not clearly defined might provide a means to unify some of the conflicting findings

The Coalition's record on employment: policy, spending and outcomes 2010-2015

The evaluation of the Coalition’s employment policy shows that although the labour market was remarkably resilient over the recession in terms of employment rates, this was largely driven by falling real wages and increases in self-employment. For many, employment became more precarious through the growth in zero hours contracts and insecure self-employment on very low incomes. The young were hit hardest with the recession having differential generational consequences, as unlike in previous recessions older workers did not suffer from skill redundancies as the recession was not accompanied by large scale industrial restructuring. In fact there was a redistribution of employment from younger workers to older workers including those working beyond the state pension age. The Government introduced a range of new active labour market programmes and reformed existing programmes but these reforms are best described as an evolution rather than a revolution as they built on a strong policy platform put in place by the previous Labour Government. Despite employment reaching new record levels, the performance of the Government’s active labour market programmes did not meet expectations and for some time, and particularly for some groups, the new programmes delivered results below those achieved by the programmes they replaced. A greater emphasis on private providers delivering services and being paid according to the results they achieve with higher financial incentives available for groups requiring additional help (in particular groups whose work capability is affected by illness or disability) has not improved relative outcomes for the most disadvantaged groups. The fiasco around work capability assessments and the fact that active labour market programmes are still failing to meet the needs of those deemed capable of work in a limited capacity suggests that a major review is now required for this group of claimants