In this note, we focus on underemployment as a potential cause of lower wage growth, which itself may have deeper causes, but which has, we would argue, demonstrably changed since the 2008 recession. The gap between our measures of the number of additional hours required by those who want more hours and the number who want less has narrowed recently. Neither have returned to their pre-recession levels. In our view, underemployment remains a major factor in explaining the 2 per cent wage norm that continues to exist in the UK.

We address basic questions about performance-related pay in the US. How widespread is it? What characteristics of employers and jobs are associated with it? What are recent trends in its incidence? What factors are responsible for these trends? Nearly two-fifths of hours worked in the US economy in 2013 were in jobs with performance-related pay, but this share has been declining. We consider several possible causes for this trend and find that they do not have much explanatory power. We do establish, however, that any potential explanation must also account for a long-term shift in the relative incidence of performance-related pay away from low-wage and toward high-wage jobs.

My title intentionally harks back to Maurice Peston's slim, but excellent, 1980 book, entitled Whatever Happened to Macro-economics. In this book, a compilation of three lectures, Maurice asks how much then remained of traditional Keynesian macroeconomics in the aftermath of the monetarist counter-revolution, and of the development of Lucasian rational expectations. Maurice was much more impressed by the new contributions of the rational expectations school than he was of those by the more traditional monetarists.

This article seeks evidence on trends in intergenerational income for cohorts born after 1970. As many of these cohorts have not yet joined the labour market, we must look at relationships between intermediate outcomes (degree attainment, test scores and non-cognitive abilities) and parental income to forecast forward from these to estimates of intergenerational earnings correlations. We find no evidence that the relationship between these intermediate outcomes and parental income have changed for more recent cohorts. Evidence from the earlier 1958 and 1970 cohorts shows that as mobility declined in the past the relationship between intermediate outcomes and parental income strengthened. We therefore conclude that, under realistic assumptions and in the absence of any significant unanticipated changes, the decline in intergenerational mobility that occurred between 1958 and 1970 birth cohorts is unlikely to continue for cohorts born from 1970 to 2000. Mobility is therefore likely to remain at or near the relatively low level observed for the 1970 birth cohort.

House price inflation in the UK has been particularly high in recent years. This has led to much discussion concerning the future path of house price growth. Whether the future scenario involves a moderation or instead a sharp correction in house prices has important implications for the short to medium path of household consumption expenditure.

In this election year of 1987 the state of Britain's technology has remained high on the political agenda. Following the critical report from the House of Lords on civil research and development (1986), the government recently announced changes in its machinery and priorities and expressed concern about British industry's (lack of) funding of R and D compared to the main sources of foreign competition (see HM Government, 1987).

In the twenty years since the Cultural Revolution, China has maintained fast real growth. This occurred despite China having similar problems to other transitional economies, e.g. loss-making State Owned Enterprises (SOEs), eroding fiscal revenues and inflation, (Section 3).

Although China initially adopted the Soviet central planning model, after the 1950s break Chinese planning changed towards a regionally-based system with local planning (Section 2). In contrast to the centrally-based, functionally-specialised (U-form or unitary structure) Soviet model, the Chinese economy is organised on a multi-layer-multi-regional (M-form) basis. This encour aged development of small size township and village enterprises (TVEs), the main engine of Chinese growth.

Power and control remained with the Party and the State, but was diffused much more widely, regionally and locally. This allowed initiatives at lower (political) levels to establish institutions, both in agriculture (the ‘household responsibility system’) and industry (TVEs), without state protection. Even among regionally controlled SOEs, ‘tournament rivalry’ between regions, etc., and between SOEs and TVEs provided competition.

The freedom of movement of persons is one of the core tenets of the European Union. Immigration however is often seen as a cause for concern amongst native workers, as rising labour supply may threaten jobs and create downward pressure on wages. National politicians are increasingly under pressure to guard against it — in times of recession particularly. Despite this, there is evidence that highly-skilled migrant labour has the potential to raise competitiveness significantly and in theory this may feed into productivity. In this paper, we explore first the composition of inward migration to the EU and within the EU, concentrating specifically on the role of the highly-skilled and the extent to which migrants are overqualified within their jobs. We then analyse whether migrant workers affect productivity at the sectoral level. We find under-utilisation of skilled foreign labour and there is little evidence in general to suggest that migrants have raised productivity which may in part be attributable to over-qualification. However, we find robust evidence that migrants — particularly highly-skilled migrants — play a positive role in productivity developments in industries which are classified as ‘skill intensive’.

The world electronics industry has been one of the fastest growing in the past half century, with a compound rate of growth of over 10 per cent per annum at constant prices since 1935.[1] Within the total, the output of ‘electronic consumer goods’ is no longer rising particularly fast in most advanced countries ; but the output of ‘electronic capital goods’ has been increasing at over 15 per cent a year (in current prices) over the past six yeats, and will probably continue to rise rapidly according to most forward estimates.121 This article is mainly concerned with capital goods ; but for some purposes it is necessary to consider the industry as a whole. Many firms produce both consumer and capital goods, because they use similar components and techniques and draw on a common fund of skilled manpower and research knowledge.

This article explores the implications of alternative policy regimes for gender wage inequality. Against the background of a description of recent changes in pay ratios of men and women in Britain, the focus is primarily on calculating the likely effects on gender wage ratios of introducing the statutory minimum wage in the UK. The effects of alternative options are also assessed in part; giving women men's average hourly earnings, leaving occupations unchanged, and redistributing women through occupations in the same proportions as men, leaving their occupational average pay unchanged. The largest effects on pay ratios come from giving women the same pay as men in their existing occupations. However, a statutory minimum wage of £3.60 per hour does improve the gender pay ratio and helps women at the lower end of the pay spectrum. It is also considerably easier to implement than other options.

This article considers the role of fiscal policy within a European Monetary Union. There are two quite different issues. The first is the medium-term problem of deficits and debt. The Maastricht fiscal convergence criteria are usually seen as an imperfect response to the need to contain potentially ‘irresponsible’ fiscal authorities. It is argued here that they should be seen as reflecting a coordinated response to the generalised objective of fiscal consolidation and restraint in Europe: similar rules are likely to be a feature of Stage 3. There is a danger that governments are underestimating the difficulties of fiscal consolidation in a large area such as Europe. In practice, success would require a sustained rise in private sector investment and growth (or reduced private savings). The monetary coordination to go with generalised fiscal restraint appears to be lacking and we suggest a preemptive cut in interest rates. A more complete view of the causes of rising debt stocks in Europe is needed, and we suggest that a reframing of the problem of deficits and debt in terms of the needed (counterpart) private sector responses would be helpful in highlighting the coordination problems and avoiding adverse dynamic reactions. The medium-term problems interract unfavourably with the second set of issues-the need for fiscal policy to be used more actively for short-term stabilisation in a future common currency area. Fiscal offsets are an appropriate response to domestic demand shocks, but not to others, such as those requiring a change in the real exchange rate. Contrary to the ‘fiscal federalist’ position, such stabilisation need not involve centralisation. But there are serious difficulties. Without care, needed stabilisation will be prevented by the Maastricht criteria or the rules likely to follow them. And without coordination, independent stabilisation of common shocks will tend towards too little fiscal activism rather than too much.

In this paper we explore for the first time regional differences in the patterning of occupational social mobility in the UK. Drawing on data from Understanding Society (US), supported by the Labour Force Survey (LFS), we examine how rates of absolute and relative intergenerational occupational mobility vary across 19 regions of England, Scotland and Wales. Our findings somewhat problematise the dominant policy narrative on regional social mobility, which presents London as the national ‘engine-room’ of social mobility. In contrast, we find that those currently living in Inner London have experienced the lowest regional rate of absolute upward mobility, the highest regional rate of downward mobility, and a comparatively low rate of relative upward mobility into professional and managerial occupations. This stands in stark contrast to Merseyside and particularly Tyne and Wear where rates of both absolute and relative upward mobility are high, and downward mobility is low. We then examine this Inner London effect further, finding that it is driven in part by two dimensions of migration. First, among international migrants, we find strikingly low rates of upward mobility and high rates of downward mobility. Second, among domestic migrants, we find a striking overrepresentation of those from professional and managerial backgrounds. These privileged domestic migrants, our results indicate, are less likely to experience downward mobility than those from similar backgrounds elsewhere in the country. This may be partly explained by higher educational qualifications, but may also be indicative of a glass floor or opportunity hoarding.

Throughout this article the word ‘research’ is, for convenience, used as short-hand for ‘research and development’—except in one or two instances where the context makes clear that development costs are being discussed separately. The comparison is restricted to manufacturing industry, and excludes capital expenditure.

We investigate declining output volatility in the G7 since 1970 in a panel context, seeking to explain the causes of the decline. We show that there is a significant role for both net financial wealth and trade openness as well as inflation volatility, even though previous studies have ignored the fact that it may be endogenous and its role therefore spurious. However, its importance clearly varies over time and across countries, and it appears less important as an explanation of declining volatility in the US than it does in the UK. Changes in openness appear to be at least as important in explaining the decline in US output volatility.

This paper considers the origins and characteristics of the current economic crisis in Ireland. In particular, it examines how fiscal policy contributed to the crisis rather than preventing it. The paper gives details of the major fiscal tightening that is under way. By 2014 the authorities will have implemented a package of ex ante cuts equivalent to one-fifth of GDP. The costs of this package, together with the more permanent effects of the recession on potential output, are discussed and the legacy effects of the crisis for government indebtedness are analysed.

‘One of the most long-standing problems in this country is our failure to our school-leavers adequately for work.’

(The Chancellor of the Exchequer in his budget March 1985)

The way higher productivity depends on a workforce that is technically-skilled at all levels—from operators and foremen to senior engineers and directors of production—was examined on the basis of an interview-study of matched engineering firms in Britain and Germany in the last issue of this Review. The present article traces differences in workforce skills between these two countries to differences in preparation at school, particularly in mathematics and vocational education, and particularly for those in the lower half of the ability spectrum.

The 2007–8 banking crisis in the advanced economies has exposed deficiencies in risk management and prudential regulation approaches that rely too heavily on mechanical, albeit sophisticated, risk management models. These have aggravated private and economic losses. While fiscal costs were at first limited, it remains to be seen to what extent the taxpayer will be protected. Policymakers and bankers need to recognise the limitations of rules-based regulation and restore a more discretionary and holistic approach to risk management.

Various kinds of incomes policies have been in operation in the UK over a substantial part of the post-war period, particularly since the mid-1960s. There is considerable uncertainty about the effects of incomes policy on the rate of change of wages, and in this paper we attempt to assess the effects of incomes policy using econometric equations of wage inflation.

None of the existing models for the future trade policy relationship between the UK and the EU come with a predetermined foreign and security policy relationship. This article assesses how the future EU-UK foreign and security policy relationship might be organised post-Brexit. It provides evaluation of the current EU-UK interrelationship in the fields of the EU's Common Foreign and Security Policy (CFSP) and Common Security and Defence Policy (CSDP) and assesses the degree to which the UK is presently integrated into EU decision-making and implementation. It highlights that the UK needs to determine the degree to which it wants autonomy or even divergence from existing EU policies. The article concludes by rehearsing the costs and benefits of three possible future relationships between the UK and EU foreign, security and defence policy: integrated, associated or detached.

The business cycle has an importance in the popular debate which can tend to run ahead of the problems in measuring it. This paper provides a survey of the main statistical techniques that are used to measure the cycle. An application to the UK illustrates that the choice of what measure, or measures, to use is more than a dry academic issue. Inference about the business cycle is potentially sensitive to measurement. Fortunately, however, there is an element of consensus.