Are UK households and businesses well served by its financial services industry? The UK is a world leader in international finance. Yet our families must rely on variable rate and often opaque mortgages that add to housing market and economic volatility. Almost 90 years ago the Macmillan Committee identified a gap between our financial and industrial worlds. Doubts remain about the availability of finance for small and medium size enterprises and that a lack of venture capital holds back our economy. NIESR is regularly commissioned to provide impartial and original evidence on the supply of finance and financial stability.
People's education investment and labour market participation create the human capital stock available to the economy - knowledge, skills and ideas, the basis of all economic activity. Employment is also a major source of individual wellbeing, generating income and recognition needed to form successful life trajectories and build strong communities. However, after a decade of stalled growth, stagnating wages and productivity and persistent income inequality, we need to re-evaluate the effectiveness of education and labour market policy, so that the full productive potential of the economy and highest possible quality of life can be achieved. Major issues are:
- Improving primary and secondary education attainment and the reduction of inequality in education investment, which disadvantages children from poor families;
- Increasing the availability of skilled labour by improving technical and vocational education and by offering further training where workers need to adjust to technological change;
- Making work more productive (a UK worker needs five days to produce the output a French worker produces in four days);
- Reducing income inequality by creating effective mechanisms of wage formation, including the statutory minimum wage regime.
At the National Institute, we seek better to understand - and ultimately to help improve - education and labour market policy by evaluating the impact of concrete policy options compared to counterfactual outcomes of alternative or no policy intervention. We do this by applying rigorous micro and macro-econometric research designs like Random Control Trials (RCTs), econometric impact assessments or structural modelling to large scale linked data from a variety of sources, especially individual education and labour market and firm-level data from Central Government registers.
Projects: "Using administrative and big data to improve labour market statistics" with our partner, ESCoE
The world of work is changing. Technology, globalisation and the development of new business models are creating new jobs, types of work and contracting arrangements. Zero hours and temporary work are becoming standard practice in some industries. The workplace itself has undergone considerable transformation and is in some cases virtual rather than physical: remote working and off-shoring are common in sectors such as IT. The UK’s exit from the EU is likely to bring further changes as employers seek new ways to meet their labour needs.
Many jobs and working lives have become unstable and precarious. There are changes in the distribution of work between social groups and across the life cycle. The proliferation of low skilled, low paid and part-time work is affecting the distribution of income, resulting in widening inequality and social exclusion. Low and worsening levels of social mobility cement inequality further, impacting on health, educational achievement and crime.
The Institute has a strong reputation for research on labour market and social change and, in particular, immigration. Our current research programme is focused on understanding the impact of migration and other changes on the labour market, through quantitative and qualitative methods. We also have a strong programme of research on education and training, including interventions in schools designed to improve outcomes for disadvantaged children.
What are the key considerations when examining what sort of relationship Britain ought to pursue with the rest of the EU? These are not only highly charged political questions, but also of profound importance to the future economic prosperity. NIESR has been applying its expertise on the issues raised by the prospect of Brexit all through the EU referendum campaign. Our work on these topics up in the run-up to the vote can be viewed here.
Ever since the Referendum result we have turned our attention to the different trade-offs in play as Britain invoked Article 50 and prepared for exit talks. Among other things, we have been analysing the effects of uncertainty on sterling and the corresponding rise of inflation, the impact of different types of trade deals on the volumes of trade and the consequences of future changes to free movement on labour markets, the welfare system and the economy more widely.
Our continuing work on these topics is available here.
Our greatest economic challenge is to understand how the forces of globalisation will affect our prosperity. Modelling important economic and financial interactions in the global economy is the best way to make sense of the processes shaping our future. NIESR is the leading macroeconomics research institute in the UK. We are home of one of the most successful large-scale structural macroeconomic models in the world. Subscribers to the National Institute Global Econometric Model (NiGEM) include 30 of the largest central banks and finance ministries and an increasing number of private organisations. The integrity of our model has primacy ahead of commercial concerns.
Staff: Jagjit Chadha, Roger Farmer, Arno Hantzsche, Ian Hurst, Amit Kara, Yanista Kazalova, Thomas Lazarowicz, Jason Lennard, Cyrille Lenoel, Iana Liadze, Marta Lopresto, Rebecca Piggott, Craig Thamotheram and Garry Young.
See below for details about our model, NiGEM:
Why is the UK less productive than similarly advanced nations and what can be done about it? How are the gains from economic growth distributed and why does this matter? What drives firms’ investment patterns and what is the role of institutions, firms and financial intermediation in explaining trends and cycles in productivity? These questions have gained far greater significance since the global financial crisis as productivity growth has disappeared and income gains stagnated for many.
More recently, the process of negotiating the UK’s exit from the EU is throwing our trade with the rest of Europe and the world into sharp relief. What are the consequences of globalization for the UK economy? What is the impact of the rise of trade within the global value chains for British firms and workers? How do we assess UK comparative advantage in the interconnected global economy? Understanding these challenges are key to policy making and our future prosperity.
NIESR has a long record of leading trade, productivity and labour markets research. Our research focuses on improving the measurement of productivity, understanding the influence of education, training & skills on economic performance, the drivers of firm behaviour and innovative capacity, the impact of import competition on local labour markets and the improvement in trade in value added measurement.