Rebecca Riley

EU Enlargement and Migration: Assessing the Macroeconomic Impacts

Enlargement of the European Union in May 2004 was followed by an increase in migration from the poorest of the central and eastern European New Member States (NMS) to other Member States. We consider the macroeconomic impacts of these migration flows across Europe, highlighting impacts in receiving and sending countries.

The Drivers of International Migration to the UK: A Panel‐Based Bayesian Model Averaging Approach

A heterogeneous panel-based Bayesian model averaging approach is used to identify the robust economic and policy drivers of international migration to the UK from 14 different source regions over 1980–2007. Around three-quarters of the increase in net immigration over the last decade, which is particularly pronounced for selected source regions, is associated with structural change, which may be attributed to UK and foreign immigration policy. The remainder of the rise is largely explained by ‘friends and family’ effects. There are considerable uncertainties associated both with the effects of particular economic drivers of immigration and with forecasts of immigration.

The Current Position of UK House Prices

Chart 1 plots year-on-year growth of real house prices from the fourth quarter of 1964 to the first quarter of 2004. The series plotted is a seasonally adjusted version of the Office of the Deputy Prime Minister (ODPM) mix-adjusted house price index. This house price index is deflated using the National Accounts consumption expenditure deflator before calculating growth rates to show real house price growth. The peaks in the rate of real house price inflation are all followed by periods of

A Re‐Examination of the Impact of the UK National Minimum Wage on Employment

A general consensus has emerged that while the UK National Minimum Wage (NMW) raised the pay of low wage workers it did little to harm their employment prospects. This is in contrast to the US and other countries where a debate over minimum wage effects still rages on. We re-examine the evidence on the introduction of the NMW and look at subsequent increases through the recession focusing on several groups in the labour market. We find a reduction in employment retention among part-time female workers, the group which is most affected by the NMW. These effects deepen in the recession.

Economic Performance in France, Germany and the United Kingdom: 1997-2002

We assess the performance of France, Germany and the United Kingdom over the period 1997–2002. Gross and net output per hour worked are considerably lower in the UK than in France and Germany. GDP in France and the UK have grown at the same rates over the period although real national income in the UK has grown considerably faster than in France. Seen from the supply side, French growth is substantially attributable to growth in total factor productivity while in the UK factor inputs are more important. There is, nevertheless, a concern that, at the margin, UK growth may be depreciation-intensive and therefore of poor quality. Germany’s growth has been slow because productive inputs have grown only slowly and its weak performance is probably structural rather than cyclical. There does seem to be room for substantial increases in labour input in both France and Germany to be achieved through reform to labour market conditions such as tax rates on low paid workers.

The Financial Crisis, Bank Lending and UK Productivity: Sectoral and Firm-Level Evidence

This paper assesses the evidence and investigates some of the mechanisms by which the most recent banking sector crisis might have affected the supply side of the UK economy. We find clear evidence that the banking sector crisis affected credit supply to businesses and caused bank lending to decline. But we do not find much evidence of the heterogeneity in performance between different industrial sectors that would have been expected if banking sector impairment had been the key factor holding back productivity growth. Consistent with this we do not find strong evidence that a lack of reallocation of resources across businesses has been a substantial drag on productivity growth.

ICT and the Returns to schooling and job-specific experience

We use the United Kingdom Labour Force Survey to estimate the returns to schooling and job-specific experience in sixteen differnt industry sectors over the period 1994-2001. Next, assuming skill levels are fixed, we assess the marginal effect on those returns of the capital intensity of production and the ICT intensity of capital. Our results indicate that in the UK, over the period 1994-2001, the rising ICT intensity of capital was associated with a rise in the return to schooling, and a reduction in the return to job-specific experience.

The Impact of Fiscal and Monetary Policy Imbalances on the UK Economy

This article evaluates the density forecasts of inflation published by the Bank of England and the National Institute of Economic and Social Research. It extends the analysis of the Bank of England’s fan charts in an earlier article by considering data up to 2003, quarter 4, and by correcting some technical details in the light of information published on the Bank’s website in Summer 2003. National Institute forecasts are also considered, although there are fewer comparable observations. Both groups’ central point forecasts are found to be unbiased, but their density forecasts substantially overstated forecast uncertainty.

Measuring the Macroeconomic Effects of Reducing Benefit Dependency

We construct a framework for evaluating the macroeconomic impact on the UK economy of policies that are aimed at reducing the number of people receiving social security benefits by helping them into employment. By means of model simulation we evaluate the gains to the economy in terms of output, employment and improvements to the public finances of a policy that reduces the number of people claiming disability benefits or lone parents on Income Support by 5 per cent. These gains can be regarded as significant and have to be offset against the costs of the policy. We conclude that it is possible to evaluate the impact of policies to enable benefit claimants to find work using a macroeconomic model, and that such an evaluation should be included in each assessment of policy change.

The UK Productivity Puzzle 2008-13: Evidence from British Businesses

In many larger advanced economies labour productivity growth slowed sharply and remained subdued for years after the credit crisis of 2007/08. Nowhere was this more obvious than in the United Kingdom. We examine the dynamics of productivity among British businesses that lie behind this stagnation. The most striking feature is the widespread weakness in total factor productivity within firms, pointing to the importance of a common factor in explaining productivity weakness. In addition,we find that the positive correlation between surviving firms’ employment growth and their relative productivity ranking broke down after 2007/08, as would be expected if an adverse credit supply shock had caused inefficiencies in resource allocation across firms. Indeed, during the immediate recession years 2008/09, this shift was most apparent in sectors with many small and bank dependent businesses. But subsequently, while the contribution of external reallocation to aggregate productivity growth in 2010/13 was smaller than in previous years, this was not obviously associated with sectoral bank dependence. We illustrate the sensitivity of these findings to the choice of decomposition method.