Modelling the impact of Covid-19 on the UK economy: an application of a disaggregated New-Keynesian model

We set out a framework that can be used to evaluate policies intended to mitigate the economic effects of Covid-19.  In our framework shocks that affect only certain sectors can spill over to other sectors because of input-output linkages and limited income insurance.  We show that policies such as the furlough scheme can prevent the sharp rises in unemployment that might arise in the absence of the scheme, and illustrate how such policies can be evaluated using the framework. 

The Impact of Management Practices on SME Performance

We examine the impact of management practices on firm performance among SMEs in Britain over the period 2011-2014, using a unique dataset which links survey data on management practices with firm performance data from the UK’s official business register.

Are firms paying more for performance?

We use nationally-representative, monthly data on the total wage bill and employment of around 8,500 firms to investigate fluctuations in the economic importance of performance bonuses in Britain over the past 15 years. We decompose the share of the total economy-wide wage bill that is accounted for by performance-related pay (PRP) into: (i) the shares of employment in the PRP and non-PRP sectors; (ii) the ratio of base pay between the two sectors; and (iii) the gearing of bonus payments to base pay within the PRP sector.

Who fared better? The fortunes of performance-pay and fixed-pay workers through recession

We examine whether those paid for performance fared better in terms of wage growth and job tenure than their fixed pay counterparts through the most recent recession. In theory we might anticipate that, since performance pay workers share the income risks of economic shocks with their employers, their earnings may have declined more than those of fixed pay employees. However, for this very reason, they may experience more stable employment patterns than fixed pay workers whose ‘stickier’ wages may make them susceptible to job loss.

Job creation supplement

A data annex for the article on Job Creation is in the supplement here.


Bob Butcher

2 August 2013

The Evolution of the Modern Worker: Attitudes to Work

This paper examines how employees' experiences of, and attitudes towards, work have changed over the last quarter of a century. It assesses the extent to which any developments relate to the economic cycle and to trends in the composition of the British workforce. Many of the findings are broadly positive, particularly when compared with a picture of deterioration in the late 1980s and 1990s. The onset of a major recession in the late 2000s might have been expected to herald a fundamental shift in employees' attitudes to paid work and their working environment.