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A quality-adjusted labour input series for the United Kingdom (1975-2002)

Listed author(s):
  • Venetia Bell
  • Pablo Burriel-Llombart
  • Jerry Jones

In this paper, annual indices of labour input adjusted for the education, age and gender distributions of the UK workforce are presented for the period 1975-2002. These measures show that improvement in labour quality, as proxied by education, age and gender, has added on average 0.67 percentage points per year to the growth rate in total labour input. Changes in the education distribution more than account for the improvement in labour quality, adding 0.68 percentage points per annum. Changes in the age distribution have made a much smaller contribution, adding only 0.11 percentage points to the growth rate. The rise in female participation has had a small negative effect of 0.08 percentage points, as women have had a preference for part-time work, which tends to be paid less per hour than full-time jobs. Using this evidence, the key finding of this paper is that a large proportion of growth that is usually attributed to TFP (total factor productivity) growth can be accounted for by an improvement in the quality of labour input. This result has no implications for the measurement of UK GDP growth from 1975-2002, but it does help to identify more accurately the sources of that growth.

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Paper provided by Bank of England in its series Bank of England working papers with number 280.

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Date of creation: Oct 2005
Handle: RePEc:boe:boeewp:280
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  1. Susanto Basu & John G. Fernald & Nicholas Oulton & Sylaja Srinivasan, 2003. "The Case of the Missing Productivity Growth: Or, Does Information technology explain why productivity accelerated in the United States but not the United Kingdom?," Harvard Institute of Economic Research Working Papers 2021, Harvard - Institute of Economic Research.
  2. David Card & Richard B. Freeman, 2004. "What Have Two Decades of British Economic Reform Delivered?," NBER Chapters,in: Seeking a Premier Economy: The Economic Effects of British Economic Reforms, 1980-2000, pages 9-62 National Bureau of Economic Research, Inc.
  3. Katz, Lawrence F. & Autor, David H., 1999. "Changes in the wage structure and earnings inequality," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 26, pages 1463-1555 Elsevier.
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