(Non)Participation in the labour market: alternative indicators and estimates of labour reserve in United Kingdom regions

Abstract

In the context of the continuance of mass high unemployment in the United Kingdom and considerable debate concerning the 'real level' of unemployment, the authors of this paper go beyond the official unemployment rate by focusing on the development of alternative indicators of labour reserve in the regions of the United Kingdom. They show how, on a step-by-step basis, successively 'broader' indicators of labour reserve (more specifically, those on government training schemes, various categories of those conventionally defined as economically inactive who would like a job, and those in part-time work because they could not find full-time employment) may be derived by means of data from the Labour Force Survey. They then go on to outline the key features of regional variations in the scope for additional labour-force participation. As labour supply is a dynamic concept, and the utilisation of the labour reserve implies transitions from unemployment and nonemployment to employment, selected information on transitions between labour-market states and on the previous economic circumstances of the unemployed is presented. Some key features of the broad regional geography of those categorised as in employment, but 'on the margins' of the labour reserve, are highlighted also. Finally, the implications for policy of substantial labour reserves in many regions in the United Kingdom are explored.