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Labour force composition and UK productivity

Author

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  • Peter Spencer

Abstract

This paper constructs new measures of effective labour input in the UK economy. Unlike previous studies, which focus on the aggregate effect of labour quality on output, it analyses the contributions of factors such as human capital and industrial structure separately. Using data from the ONS and HMRC, numbers of employees and hours worked are weighted by labour costs, used as an indicator of their marginal productivity. The results underline the importance of investment in training and education. They also show that the reallocation of employment towards lower-productivity industries has reduced labour productivity, while regional migration has increased it. This approach provides a useful framework for analyzing structural change in the labour market and for monitoring the effect of government policy.

Suggested Citation

  • Peter Spencer, 2026. "Labour force composition and UK productivity," Discussion Papers 26/02, Department of Economics, University of York.
    • Handle: RePEc:yor:yorken:26/02
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    Keywords

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    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation

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