Biases in the reporting of labour market dynamics

Correctly measuring individual dynamics in labour market behaviour has become increasingly important as research and policy attention has become more focused on the relationships between current employment opportunities and past experience. Surveys collecting information on labour market histories use repeated interviews and retrospective reporting, laying the resulting data open to potential biases from spurious transitions due to random measurement errors and from systematic recall error. This paper uses a unique data opportunity provided by the British Household Panel Survey to systematically investigate the impact of recall on measured labour market behaviour and to highlight how and to what degree the biases in the reported data may affect the estimation of models of labour market dynamics. The results allow analysts to judge whether conclusions drawn from such models are likely to be compromised by the reporting biases.

The role of employment experience in explaining the gender wage gap

The wage gap between male and female workers has narrowed in both the US and the UK over the past twenty five years. At the same time, employment rates for men and women have converged. This paper examines the relationship between these two facts by analysing the role played by labour market experience in explaining the narrowing gender wage gap. We analyse the relationships between male and female levels of experience and relative wages in the US and the UK over the period 1978 to 2000. The estimation procedure is based on pseudo panels created from cross-sectional data (Current Population Survey (CPS) for the US and Family Expenditure Survey (FES) for the UK). Possible biases from unobserved heterogeneity and the endogeneity of experience are addressed by using an ‘imputed’ measure of experience based on grouped data and by estimating the wage regressions in first differences. Differences in levels of experience are found to explain 39 percent of the gender wage gap in the US and 37 percent in the UK, and failure to control for unobserved heterogeneity is found to understate the role played by total experience in explaining the gap. The gender wage gap has diminished over recent successive cohorts of workers. However, the evidence suggests that the improvements in relative female wages can’t be attributed to changes in relative levels of experience. For each of the successive cohorts we examine, total experience increases the gender wage ratio by a constant 8 to 9 percentage points in the US and the UK. We find that the average experience for female workers relative to male workers has increased over successive cohorts. However, this has either been insufficient to lead to a noticeable effect on relative wages, or changes in the returns to experience have altered affecting female relative earnings unfavourably.gender wage gap, returns to experience, artificial panel data

Child support reform: some analysis of the 1999 White Paper

This paper uses a sample of lone mothers (and former lone mothers who are now repartnered) drawn from the 1997 Family Resources Survey to analyse the potential effects of reforming the UK system of child support. The main deficiency of the data is that non-resident fathers cannot be matched to the mothers in the data, and this is overcome by exploiting information from another dataset which gives the joint distribution of the characteristics of separated parents. The effects of reforming the child support system are simulated for the amount of maintenance liabilities, the amount paid and the net incomes of households containing mothers-with-care and of households containing non-resident fathers. The likely effects of the reform are simulated at various levels of compliance. The analysis highlights the need for further research into the incentive effects of child support on individual behaviour.

Challenges for the childcare market: the implications of COVID-19 for childcare providers in England

The closures of childcare providers to most families during the COVID-19 crisis have underlined the importance of access to childcare, both to support paid work and to help shape young children’s environment. However, the crisis has had severe consequences for the finances of childcare providers, which were already weak in several parts of the sector going into the crisis. Despite a range of government support programmes, many providers lost income during lockdown. In the medium term, a longer-lasting fall in demand for childcare or an increase in costs related to social distancing could seriously hamper financial sustainability in the sector going forward. In this report, we assess the consequences of the pandemic – and the resulting public health response – for the finances of early years childcare providers