White Paper

The development of a longitudinal employer-based survey tool is one of three linked subprojects commissioned by the UK Commission for Employment and Skills within a project concerned with Skills Utilisation in the UK. The concept of skills utilisation encompasses a range of high-performance work practices with a focus on creating a working environment in which employee talents can be deployed for the optimal mutual benefit of themselves and their employer. As such it implies a particular concern with identification of workforce talents, designing work in such a way that employee talents are optimally used and offering opportunities for employees to contribute to shaping the broader development of the organisation beyond the confines of their job descriptions. Concerns about adequate deployment of workforce skills derive from broader concerns about the role of skills in contributing to the UK’s economic performance. The UK ‘skills problem’ is multi-faceted, well documented and has a long history. Our stock of skills and their optimal deployment fare relatively poorly when compared internationally according to Skills Utilisation measures such as labour productivity and levels of qualifications among different workforce groups. Access to opportunities for skills acquisition is uneven as are their impacts and a number of reasons are provided for this, often deriving from Human Capital Theory (Becker, 1964). For organisations, underinvestment in skills may appear to be a rational response in the face of risks such as poaching of trained workers and payback time on investment. Equally organisations may be keen to invest in developing workforce skills, but lack capacity or capability to manage the process, or simply find it difficult to source appropriate training or lack broader knowledge of how skills utilisation can be optimised. It is within this context that this survey tool has been developed.

Three research questions were designed to investigate the relationship between individual team-member characteristics and team adaptability. The first found perceptual measures of self- and team-adaptability are related within persons. The second examined perceptual measures of adaptability using social combination models to compare individual members' perceptions of adaptability to the team-level construct of adaptability. Team adaptability was moderately related to the member with the highest self-perceived self-adaptability early in team formation but more strongly related to the average team member's self-adaptability later in training. Finally, team perceptions of adaptability were used to predict team adaptive performance on non-routine trials over time. Team perceptions of adaptability were not found to be related to adaptive team performance.

Recent technological changes have been characterized as “routine-substituting,” reducing demand for routine tasks but increasing it for analytical and service tasks. Little is known about how these changes have impacted immigration, or task specialization between immigrants and natives. In this paper we show that such technological progress has been an important determinant of immigration, attracting immigrants who increasingly specialize in manual-service occupations. We also suggest that open- ness to immigration attenuated job and wage polarization for natives resulting from technological changes. We explain these facts with a model of technological progress and endogenous immigration. Simulations show that unskilled immigration attenuates the drop in routine employment proceeding from technological change, enhances skill-upgrading for natives, and raises economy-wide productivity and welfare.

We examine the determinants of the within-industry decline of the labor share, using industry-level annual data for 25 OECD countries, 20 business-sector industries and covering up to 28 years. We find that total factor productivity growth—which captures (albeit imprecisely) capital-augmenting or labor-replacing technical change—and capital deepening jointly account for as much as 80 % of the within-industry contraction of the labor share. We also find that another factor explaining the aggregate decline of the labor share is the increased international competition, with higher import penetration causing a contraction of the share of labour-intensive industries in total value added. However, the fraction of the drop of the labor share explained by international competition remains limited.

This paper links data on establishments and individuals to analyze the role of establishments in the increase in inequality that has become a central topic in economic analysis and policy debate. It decomposes changes in the variance of ln earnings among individuals into the part due to changes in earnings among establishments and the part due to changes in earnings within-establishments and finds that much of the 1970s-2010s increase in earnings inequality results from increased dispersion of the earnings among the establishments where individuals work. It also shows that the divergence of establishment earnings occurred within and across industries and was associated with increased variance of revenues per worker. Our results direct attention to the fundamental role of establishment-level pay setting and economic adjustments in earnings inequality.

This chapter considers means-tested employment and training programs in the United States. We focus in particular on large, means-tested federal programs, including the Job Training Partnership Act (JTPA), its successor the Workforce Investment Act (WIA), that program's recent replacement, the Workforce Innovation and Opportunity Act (WIOA), the long-running Job Corps program, and the Trade Adjustment Assistance (TAA) program. The first part of the chapter provides details on program history, organization, expenditures, eligibility rules, services, and participant characteristics. In the second part of the chapter, we discuss the applied econometric methods typically used to evaluate these programs, which in the United States means primarily social experiments and methods such as matching that rely on an assumption of "selection on observed variables." The third part of the chapter reviews the literature evaluating these programs, highlighting both methodological and substantive lessons learned as well as open questions. The fourth part of the chapter considers what lessons the evaluation literature provides on program operation, especially how to best allocate particular services to particular participants. The final section concludes with the big picture lessons from this literature and discussion of promising directions for future research.

Using a country-industry panel dataset (EUKLEMS) we uncover a robust empirical regularity, namely that high risk innovative sectors are relatively smaller in countries with strict employment protection legislation (EPL). To understand the mechanism, we develop a two-sector matching model where firms endogenously choose between a safe technology with known productivity and a risky technology with productivity subject to sizeable shocks. Strict EPL makes the risky technology relatively less attractive because it is more costly to shed workers upon receiving a low productivity draw. We calibrate the model using a variety of aggregate, industry and micro-level data sources. We then simulate the model to reflect both the observed differences across countries in EPL and the observed increase since the mid1990s in the variance of firm performance associated with the adoption of information and communication technology. The simulations produce a differential response to the arrival of risky technology between low- and high-EPL countries that coincides with the findings in the data. The described mechanism can explain a considerable portion of the slowdown in productivity in the EU relative to the US since 1995.

This report considers the current situation of the UK Education sector, the challenges it faces over the medium-term and its implications for skills. The intention is to provide a summary of the extent to which the performance challenges faced by the sector can be addressed through skill development and thereby bring about growth and contribute to the recovery of the UK economy.

This report presents a framework - Skills Toward Employment and Productivity (STEP), that provides a simple yet comprehensive way to look at skills development. It brings together research evidence and practical experience from a range of areas-from research on the determinants of early childhood development and learning outcomes, to policy experience with the reform of vocational and technical education systems and labor markets-and provides a set of powerful messages to policymakers, researchers, and practitioners. The report's emphasis on performance measurement and benchmarking, policy and program evaluation, and cross-sectoral approaches focusing on individuals throughout their lifecycle provides a solid platform for developing countries to start exploring reforms