The first edition of The State of Working Britain was published in 1999, and this third volume, The Labour Market in Winter edited by Paul Gregg and Jonathan Wadsworth, continues the tradition of careful, comprehensive analysis of the labour market in the UK. (Volume 2 was The Labour Market under New Labour.) The issues covered include employment and unemployment, job quality, and the trends, causes and consequences of income inequality. Each chapter is written by leading experts on the specific subject – and labour economics is a field in which British economists are particularly strong. So the quality of the research is consistently high, and all the underlying data are available online – no danger of slapdash econometrics here.
The range of material is too wide for me to review it all. The migration chapters – one by Steve Nickell and Jumana Saleheen on the overall labour market impacts of high migration and one on second generation immgrants by Christian Dustmann, Tommasso Frattini and Nikolaos Theodoropolous – were of particular interest to me. (Co-editor Jonathan Wadsworth is a colleague of mine on the Migration Advisory Committee.) The first of the two finds some evidence that high levels of immigration have borne down on wages at the bottom end of the income and skill scale – but the effect is surprisingly small, perhaps, in the context of the size of the inflows. The chapter concludes that the more salient impact for existing UK residents may lie in the implications of faster population growth for housing, school places, transport and so on – although as they note: “Developed land in England occupies some 8.5% of the total land area. In contrast, some 54% of the people surveyed in 2005 think that urban areas take up more than 50% of the land area.” Even if we're not, this feels an overcrowded land. The chapter on second generation ethnic minority migrants reveals that tehy tend to be better educated than their white native peers but have lower employment rates and lower wages on average. However, there are significant differences between different minority groups, and between the sexes in come cases. Black Caribbean and Chinese women and Indian men fare relatively well, Black African, Bangladeshi and Pakistani women particularly poorly, by comparison with white native peers.
I also found the chapter on regional labour markets interesting (its authors are Peter Dolton, Chiara Rosazza-Bondibene and Jonathan Wadsworth). Some of the results were familiar – the north-south divide narrowed during the boom, but employment rates and wages are lower in the north than the south, and the north depends more on public sector jobs. Mobility between regions is at its lowest for decades, moreover. The chapter also maps the skills distribution of the UK, which is as uneven as the wage distribution implies. The regional divide has plagued the UK for decades and is unlikely to alter, the chapter concludes, without a significant shift of capital to the North. As British banks don't like to lend to business, and certainly not to businesses outside the home counties, there seems little prospect of that happening.
To pick out a third area, inter-generational mobility has become a policy concern – witness the recent focus on unpaid internships and their possible role in perpetuating privilege. The chapter here by Jo Blanden and Lindsey Macmillan suggests that intergenerational social mobility has stopped declining, while so far investments in Early Years schemes have not reduced the shadow family background casts over early achievements – but family background inequalities are starting to narrow by the end of secondary school. I must confess to having mixed feelings about the policy focus on social mobility per se, as it glosses over the fact that there must be as many downwardly mobile as upwardly mobile. A direct focus on distribution of adult employment and wage outcomes seems preferable.
All in all, this is an essential book for anybody with an interest in the UK labour market. It's also a model of good empirical economics with practical policy implications. I hope it's already being widely read around Whitehall and Westminster.
