Unemployment in Britain has risen from around 2 per cent in the late 1950s and early 1960s to around 3 per cent today. What accounts for this astonishing increase?

Fiscal discipline is as much needed as monetary discipline. Many countries have attempted to counter the deficit bias by adopting fiscal rules that typically set a limit to their annual budget deficits. The record is not satisfactory; rules are either too lax or too tight and then ignored. This article suggests that the solution is to adopt the approach followed by inflation targeting central banks, with great success. Independent and accountable Fiscal Policy Committees, given the task of achieving debt targets and the authority to decide - or recommend - annual deficits, will be free from the deficit bias. This will allow them to exercise discretion in the short run while delivering debt sustainability in the long run.

Using data from two cohorts of graduates, this article examines three aspects of over-education. First, using three new measures, we present an estimate of graduate over-education in the UK. We find that the scale of over-education varies with measurement techniques, with weak correlations between the three measures. Second, across the three measures we estimate the effects of over-education on earnings and job satisfaction. The effects of over-education on earnings and job satisfaction are similar, not withstanding the measures identifying different individuals as being over-educated. One finding is that the effects of being over-educated are more significant for female graduates than male, although it is ambiguous which gender is more prone to over-education. Third, we examine another source of ambiguity regarding over-education, namely that firms upgrade the tasks they allocate to their employees who appear to be over-educated. We find that, for graduates, job quality for the over-educated is not converging to that of the appropriately educated.

At present six million people are suffering from clinical depression or anxiety disorders, but only a quarter of them are in treatment. NICE Guidelines prescribe the offer of evidence-based psychological therapy, but they are not implemented, due to lack of therapists within the NHS. We therefore estimate the economic costs and benefits of providing psychological therapy to people not now in treatment. The cost to the governement would be fully covered by the savings in incapacity benefits and extra taxes that result from more people being able to work. On our estimates, the cost could be recovered within two years - and certainly within five. And the benefits to the whole economy are greater still. This is not because we expect the extra therapy to be targeted especially at people with problems about work. It is because the cost of the therapy is so small (£750 in total), the recovery rates are so high (50 per cent) and the cost of a person on IB is so large (£750 per month). These findings strongly reinforce the humanitatian case for implementing the NICE Guidelines. Current proposals for doing this would require some 8,000 extra psychological therapists withing the NHS over the six years.

There is growing evidence that differences in children's intellectual, emotional and behavioural development by parents' socio-economic status emerge at early ages and that these differences cast a long shadow over subsequent achievements. This article demonstrates with the Millennium Cohort Study that differences by parents‘ income group in cognitive and behavioural development emerge by the child's third birthday. It shows that an important part of these differences can be accounted for by ‘what parents do’ in terms of educational activities and parenting style.

Both those who are critical of the current structure of corporate governance, and those who support it, share a common set of prenaises. The corporation is owned by its shareholders: managers exert power and responsibility on behalf of their shareholders: corporate governance is a question of effective accountability to shareholders. If there are problems, they should be dealt with by making these mechanisms more effective. This article challenges that view.

The principal-agent model bears no relationship to the way large companies are actually run. The attempt to bring reality in line with the model is one possible road to reform: another is to adjust the model to reality. Shareholders do not own large companies, in any ordinary sense of the word own. Firms like BT or BP are social institutions, owned by nobody. The distinction between plc and the owner managed limited company should be real, and not just titular. Corporate managers are not the agents of the shareholders, but the trustees of the assets of the corporation, which include its reputation, its distinctive capabilities, and the skills of the employees and suppliers. Their objective should not be to maximise shareholder value but to further the interests of the business.

This account is probably a better description of the current state of British company law than the principal-agent model, but we advocate a new company statute to put the matter beyond doubt. Disposing of the fiction that executives are the agents of shareholders allows us to establish an effective system for achieving the key goals of corporate governance: freedom for managers to manage, combined with real accountability for their performance. We advocate a fixed four-year term for company chief executives, involving a wide ranging and searching review of effectiveness which would involve not only directors and shareholders but advisors, associated companies and employees.

It is better that property should be private, but that man should make it common in use …. it is the task of the legislator to see that the citizens become like that. Aristotle

We examine labour market performance in the US and the UK prior to the onset of the Covid-19 crash. We then track the changes that have occurred in the months and days from the beginning of March 2020 using what we call the Economics of Walking About (EWA) that shows a collapse twenty times faster and much deeper than the Great Recession. We examine unemployment insurance claims by state by day in the US as well as weekly national data. We track the distributional impact of the shock and show that already it is hitting the most vulnerable groups who are least able to work from home the hardest – the young, the least educated and minorities. We have no official labour market data for the UK past January but see evidence that job placements have fallen sharply. We report findings from an online poll fielded from 11–16 April 2020 showing that a third of workers in Canada and the US report that they have lost at least half of their income due to the Covid-19 crisis, compared with a quarter in the UK and 45 per cent in China. We estimate that the unemployment rate in the US is around 20 per cent in April. It is hard to know what it is in the UK given the paucity of data, but it has gone up a lot.

On the basis of interviews with management and factory floor employees at 45 matched firms in Britain and West Germany, this article examines the roles of machinery and workforce skills in explaining comparative produc tivity performance. The average age of British machinery was not very different from that found in German plants, but it was less technically advanced, was subject to more frequent breakdowns and breakdowns took longer to correct. Productivity was higher in Germany in each of our matched product groups and the importance of skills at all levels was apparent.

A new group of firms has emerged since the war in Europe specialising in the design, ‘engineering’, and construction of process plants for the oil and chemical industries. These contractors undertake both the design of the plant and the procurement of the ‘hardware’ components used in the installations. Consequently the orders which they gain in world markets have a considerable indirect effect on the exports of the engineering industry, as well as providing invisible income.

This paper uses a variety of recent sources of information to explore the labour market experiences of those who gained a degree in the 1980s and 1990s. Specifically, we address the issue of ‘overeducation’ — the view that the expansion of higher education in the 1990s created a situation in which increasing numbers of graduates were unable to access employment that required and valued graduate skills and knowledge. Two complementary approaches to this issue are adopted. We review available evidence on the graduate earnings premium and change in the UK occupational structure, and we conduct a detailed examination of the earnings and characteristics of jobs done by a large sample of 1995 graduates seven years after graduation.

We conclude that, while there may have been a decline from the high premium enjoyed by older graduates, for those who graduated in 1995 the average premium was holding up well, despite the expansion. Although we found differences between established graduate occupations and the newer areas of graduate employment, our evidence suggests that the development of new technical and managerial specialisms and occupational restructuring within organisations has been commensurate with the availability of an increased supply of highly qualified people.

It is widely recognised that foreign direct investment (FDI) may have an important role to play in the transformation of the formerly centrally planned economies of Central and Eastern Europe. FDI provides a vital source of investment for modernising the industrial structure of these countries and for improving the quality and reliability of infrastructure. In addition new investments may also bring badly needed skills and technologies into the host economy. Evidence from joint ventures in Hungary (Lane, 1994) shows that such firms had a higher propensity to trade and invest than purely indigenous firms. Total FDI inflows into Hungary between 1991–93 were equivalent to 25 per cent of total fixed domestic capital formation (UINDTCI, 1995).

This study compares samples of matched plants in Britain and Germany engaged in the manufacture of women's outerwear; it follows earlier matched plant studies, also published in the National Institute Economic Review, which examined matched plants in metalworking and furniture manufacture in these two countries. German clothing manufacturers specialise in high-fashion items produced in great variety of which a high proportion is exported at high unit prices; the typical British manufacturer concentrates on more standardised items produced in long runs and is consequently more vulnerable to competition from lower-cost producers in developing countries. The study examines the contribution of machinery, new technology and skills to differ ences in clothing productivity in the two countries. A final section discusses future trends in the industry in the light of the 1992 proposals for a Single European Market.

This article reflects upon a comparative analysis of the 28 ‘City Deals’ agreed between UK government, Scottish government and city-regional groupings in England and Scotland since 2011. The City Deals have sought to incentivise local actors to identify and prioritise ‘asks’ of UK and devolved governments, fund, finance and deliver infrastructure and other economic development interventions, and to reform city/city-region governance structures to ‘unlock’ urban growth. Our analysis is based upon 32 in-depth interviews with lead actors in the City Deals, including elected officials from local government, central government officials and policy specialists from think tanks, as well as a secondary literature review. We find that City Deals are reworking the role of the UK state internally and through changed central-local and intra-local (city-regional) relations. Regional and urban public policy is being recast as a process of deal-making founded upon territorial competition and negotiation between central national and local actors unequally endowed with information and resources, leading to highly imbalanced and inequitable outcomes across the UK. As a template for public policymaking in an emergent and decentralising context, deal-making raises substantive and unresolved issues for governance in the UK that are especially pertinent as the new Conservative government at Westminster pledges to widen and broaden this approach as a central component of its future devolution strategy and policy.

This paper considers some of the implications of the increase in UK unemployment since the beginning of the Great Recession. The major finding is that the sharp increase in unemployment and decrease in employment is largely concentrated on the young. This has occurred at a time when the size of the youth cohort is large. As a response to a lack of jobs there has been a substantial increase in applications to university, although there has only been a small rise in the number of places available. Further we find evidence that the unemployed have particularly low levels of well-being, are depressed, have low levels of life satisfaction, have difficulties paying their bills and are especially likely to be in financial difficulties.

British apprenticeship, now dependent on the Modern Apprenticeship programme, is compared in this paper to both German apprenticeship and its national predecessor, Youth Training. Modern Apprenticeship shares many of the attributes of Youth Training, and shows some improvement in terms of skills produced. However, British apprenticeship performs poorly, in terms of rates of qualification and completion, as well as in breadth and depth of training, relative to its German counterpart, despite the provision by Modern Apprenticeship of substantial government financial support. The fact that MA resembles YT more than German apprenticeship reflects continuing institutional differences between the two countries, notably the limitations of the training quasi-market in which both YT and MA have operated. The prospects for MA to flourish, let alone perform the educational role that the government envisages for it, are bleak in the absence of institutional development along different lines.

The idea of industrial clusters forming the basis of regional economic growth has moved rapidly from academe to policy. This research, which forms part of the ESRC Cities: Cohesion and Competitiveness Programme, suggests that greater clarity is needed in defining and applying the concept in different regions. Several different types of clusters have already been identified. The precise basis of their relative success also seems to be different according to the degree of globalisation present and the position that regions occupy in their national hierarchies. In the case of London and the South East, the research shows that the internal characteristics of firms, the ‘pick and mix’ possibilities of a large agglomeration, and its position as an international trading gatweway, are critical for successful innovation in the region.

The overall aim of the National Institute's research programme in this field is to examine the relative contribution of physical and human capital to productivity with the help of site visits to samples of matched plants in Britain and Germany. A first study, carried out in 1983-4, was based on metalworking plants in Britain and Germany; it pointed to the overriding importance of skills at supervisory and shop floor levels in contributing to the better choice and utilisation of machinery and to a substantial German productivity advantage. The present study was carried out three years later, in 1986-7, and compares part of the wood furniture industry: the production of fitted kitchens. This branch is more standardised in its products—and hence easier to compare—than the more traditional branches of the furniture industry. It now accounts for over a quarter of the value of all furniture sales in both countries.

We present analyses of intergenerational social class mobility based on data from representative samples of the British population from 1972 to 2005. We distinguish throughout between absolute and relative rates of mobility. As regards absolute rates, we find little or no change in total mobility rates over the period covered. In the case of men, there is also little change in rates of upward and downward mobility — in contrast with the middle decades of the twentieth century when upward mobility steadily increased while downward mobility fell. This latter pattern does, however, prevail in the case of women. As regards relative rates, we again find, for men and women alike, an essential constancy over time. This, then, indicates that such changes as are apparent in absolute rates derive from shifts in class distributions rather than from any significant increase or decrease in social fluidity. Our results are contrary to the prevailing view in political and media circles that in Britain today the level of social mobility is in decline, although for men the pattern of mobility has become less favourable. We end with some remarks on policy implications.

Dispersion in pay is lower among union members than among non-unionists. This reflects two factors. First, union members and jobs are more homogeneous than their non-union counterparts. Second, union wage policies within and across firms lower pay dispersion. Unions' minimum wage targets also truncate the lower tail of the union distribution. There are two major consequences of these egalitarian union wage policies. First, the return to human capital is lower in firms which recognise unions than in the unorganised sector. Second, unions compress the wage structure by gender, race and occupation.