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Ready, willing, and able? Measuring labour availability in the UK

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  • Mark E Schweitzer

Abstract

The unemployment rate is commonly assumed to measure labour availability, but this ignores the fact that potential workers frequently come from outside the current set of labour market participants, the so-called inactive. The UK Longitudinal Labour Force Survey includes information that can be used to predict impending employment transitions. Using this unique dataset, new measures of labour availability, and indicators based on the more familiar unemployment rate alternatives, can be constructed and are reported here. The micro and macroeconomic performance of these labour force availability measures are compared. Two simplified models, which include several categories of reasons for not working as well as demographic variables, perform particularly well in all of the tests. The implications of these preferred models are further studied in the context of regional regressions and comparisons with alternative data sources. These results together illustrate the important role that some groups of the inactive can play as a source of potential workers.

Suggested Citation

  • Mark E Schweitzer, 2003. "Ready, willing, and able? Measuring labour availability in the UK," Bank of England working papers 186, Bank of England.
    • Handle: RePEc:boe:boeewp:186
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    Cited by:

    1. Marianna Kudlyak & Fabian Lange, 2014. "Measuring Heterogeneity in Job Finding Rates Among the Nonemployed Using Labor Force Status Histories," Working Paper 14-18, Federal Reserve Bank of Richmond.
    2. Kuchibhotla, Murali, 2013. "Three essays in development economics," ISU General Staff Papers 201301010800004461, Iowa State University, Department of Economics.
    3. Vincenzo Cassino & Michael Joyce, 2003. "Forecasting inflation using labour market indicators," Bank of England working papers 195, Bank of England.
    4. Aysit Tansel & H. Mehmet Taşçı, 2010. "Hazard Analysis of Unemployment Duration by Gender in a Developing Country: The Case of Turkey," LABOUR, CEIS, vol. 24(4), pages 501-530, December.
    5. Andreas Hornstein & Marianna Kudlyak & Fabian Lange, 2014. "Measuring Resource Utilization in the Labor Market," Economic Quarterly, Federal Reserve Bank of Richmond, issue 1Q, pages 1-21.
    6. Lammers, Marloes, 2014. "The effects of savings on reservation wages and search effort," Labour Economics, Elsevier, vol. 27(C), pages 83-98.
    7. Fernando Martins & Domingos Seward, 2019. "Into the heterogeneities in the Portuguese labour market: an empirical assessment," Working Papers w201908, Banco de Portugal, Economics and Research Department.
    8. Moffat, John & Yoo, Hong Il, 2015. "Who are the unemployed? Evidence from the United Kingdom," Economics Letters, Elsevier, vol. 132(C), pages 61-64.
    9. Allan Little, 2007. "Inactivity And Labour Market Attachment In Britain," Scottish Journal of Political Economy, Scottish Economic Society, vol. 54(1), pages 19-54, February.
    10. Latreille, Paul L. & Blackaby, David H. & Murphy, Philip D. & O'Leary, Nigel C. & Sloane, Peter J., 2006. "How Far and For How Much? Evidence on Wages and Potential Travel-to-Work Distances from a Survey of the Economically Inactive," IZA Discussion Papers 1976, Institute of Labor Economics (IZA).
    11. Brown, Sarah & Taylor, Karl, 2011. "Reservation wages, market wages and unemployment: Analysis of individual level panel data," Economic Modelling, Elsevier, vol. 28(3), pages 1317-1327, May.
    12. Peder Pedersen & Torben Schmidt, 2011. "What is unemployment in Europe? Concepts and measurement in the European community household panel," Empirical Economics, Springer, vol. 40(3), pages 705-728, May.
    13. Fernando Martins & Domingos Seward, 2020. "The measurement of labour market slack: An empirical analysis for Portugal," Economic Bulletin and Financial Stability Report Articles and Banco de Portugal Economic Studies, Banco de Portugal, Economics and Research Department.
    14. Murali Kuchibhotla & Peter F. Orazem & Sanjana Ravi, 2020. "The scarring effects of youth joblessness in Sri Lanka," Review of Development Economics, Wiley Blackwell, vol. 24(1), pages 269-287, February.
    15. Blackaby, D.H. & Latreille, P.L. & Murphy, P.D. & O'Leary, N.C. & Sloane, P.J., 2007. "An analysis of reservation wages for the economically inactive," Economics Letters, Elsevier, vol. 97(1), pages 1-5, October.
    16. Sarah Brown & Karl Taylor, "undated". "Reservation Wages, Expected wages and the duration of Unemployment: evidence from British Panel data," Working Papers 2009001, The University of Sheffield, Department of Economics.
    17. Andrew Brigden & Jonathan Thomas, 2003. "A matching model of non-employment and wage pressure," Bank of England working papers 208, Bank of England.
    18. O'Leary, Nigel C. & Murphy, Philip D. & Latreille, Paul L. & Blackaby, David H. & Sloane, Peter J., 2005. "Accounting for Differences in Labour Market Outcomes in Great Britain: A Regional Analysis Using the Labour Force Survey," IZA Discussion Papers 1501, Institute of Labor Economics (IZA).
    19. Katharine L. Bradbury, 2006. "Measurement of unemployment," Public Policy Brief, Federal Reserve Bank of Boston.

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