Labour Policies for Inclusive Growth

ended

Most advanced economies have struggled to deliver inclusive growth in recent decades. Many people are fearful about the impact on their lives of technological change, large-scale immigration, and a shifting balance of power in the labour market that seems to have benefitted employers at the expense of workers. There is a widening gap in economic fortunes between ex-industrial areas and dynamic cities with service-based economies. The stakes are high: we should not be surprised if some voters no longer support growth-enhancing policies if they do not anticipate benefitting from that growth. While it is easy to identify the problems, diagnosing the causes and finding effective solutions has been more difficult. This proposal aims to improve our analytical tools for thinking about these problems and to develop appropriate policies to respond. On the impact of technology, it will extend our understanding of the link between job polarization and inequality and analyse the appropriate skills policy. On immigration it will develop models of the impact of migration in which employers play a pro-active role as they do in many labour markets. This will be done by integrating models of migration with models of imperfectly competitive labour markets. The empirical content of these models and the implications for migration policies will be explored. On labour market competition the project will provide better estimates of how responsive recruitment is to wages offered by firms, and better measures of the gap between wages and productivity and how this varies across different types of labour markets. The intention is that the proposal will help to develop practical policies to improve people’s lives. But it also aims to provide improved models and empirical methodologies to make a more lasting intellectual contribution, to equip us with the tools to analyse and develop policy not just for the problems we face today but the new ones we will undoubtedly face in the future.