Labour Mobility and Earnings in the Uk, 1992–2017

Key takeaways

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Reading notes

Imported on 2024-06-26 11:24

⭐ Important

• & All else equal, five years of occupation tenure are associated with a 3.3% increase in wages. We also find that industry tenure plays a non-negligible part in driving wage growth. (p. 2)
• & While each sample member is interviewed at annual intervals, respondents are asked to report job histories since the time of their previous interview in each wave. We use these recalled job histories to construct a data set containing each individual’s employment status and any transitions between states (or from one job to another) in each month of the period since their previous interview. (p. 4)
• & e face two main difficulties in our construction of monthly employment histories: inconsistencies between the reported end date of one employment spell and the start date of the next, and inconsistencies between information reported in different waves. First, in some cases, the date that an individual recalls ending one spell of employment, unemployment or inactivity does not match the date at which they report having started their next spell. This results in either a gap in the individual’s employment history or a period where labour market spells overlap. In such cases, we systematically set the start date for all non-left censored spells equal to the end date of the previous spell. (p. 4)
• & Second, the job histories reported by individuals sometimes contradict information provided in previous waves. For example, an individual may have reported being employed at the time of their wave 1 interview, while reporting a retrospective calendar of activities in wave 2 that implies that they were non-employed at the date of their wave 1 interview. In such cases, we give precedence to information provided in older interviews over information provided subsequently, i.e., we give precedence to information provided about labour market spells provided at interviews closest to those spells. The rules that we apply to rectify inconsistencies in individual responses are thus in the spirit of the ‘closest interview method’ discussed by Smith (2011). (p. 4)
• & We construct monthly employment histories for all respondents in BHPS and UKHLS aged between 16 and 64 at the time of their interview. (Sample members therefore leave our sample on their 65th birthday and join our sample on their 16th birthday.) (p. 4)
• & We consider four possible employment states which we label as follows: employed (E), selfemployed (S), unemployed (U ), and inactive (I ). In some of our analysis, we combine employment and self-employment into a single ‘in work’ state W = E ∨ S. We assign individuals to states in each month based on their self-reported status at the end of the month. The four states are defined as follows. (p. 5)
• & (1) Employment (E) includes all individuals who report being employed (part-time or full-time), in an apprenticeship, on maternity leave, working as unpaid family workers or participating in a government training scheme. This corresponds with the ONS definition of employment.5 Including women on maternity leave in the definition of employment is consistent with Smith (2011). (2) Self-employment (S) includes all individuals who report being self-employed. (3) Unemployment (U ) includes individuals who satisfy any of the following criteria: (1) report being unemployed, (2) report having searched for work in the four weeks prior to their interview while not being employed, or (3) report having claimed unemployment benefits while not reporting being employed.6 (4) Inactivity (I ) includes all individuals who are not employed, self-employed or unemployed. This includes people who (1) report being out of work due to long-term sickness, in fulltime education, caring for family members, in retirement, or for ‘other reasons’, (2) have (p. 5)
• & not searched for work in the four weeks prior to their interview, and (3) have not claimed unemployment benefits. (p. 6)
• & We denote labour market stocks consistently with the way we label labour market states. For example, we denote the total number of employed workers in a given month t by Et , the total number of self-employed by St , etc. Following this notation, the total number of people who are in work in month t is Wt = Et + St . From those aggregate stocks, we derive the corresponding rates. The employment rate is defined as Et Wt +Ut +It . The rates of self-employment and inactivity are defined analogously. So is the total employment rate (including the self-employed), Wt Wt +Ut +It . The unemployment rate equals Ut Wt +Ut . (p. 6)
• & As explained in the main text, at each annual interview, respondents are asked to provide retrospective information about their labour market experiences since the last interview. In addition, when they are interviewed for the first time, respondents are also asked to recall their complete employment history since entry into the labour market. In principle, this feature of the survey would allow us to estimate employment rates and transitions in the period before BHPS even started in 1991, and also for new UKHLS members in the period before 2009. However, this retrospective data suffers from two main problems: recall bias and the lack of pre-panel weights. (p. 14)
• & First, the recall bias is likely to be more severe when more time has passed since the employment spell of an individual is being asked about. Individuals are asked to recall full job histories at their first interview, which means recalling events that often date back several years (or even (p. 14)
• & decades)—typically much longer than the single year individuals are asked to recall at subsequent interviews. (p. 15)