Changes in the U.K. Male Labor Force in the Postwar Period

Abstract

The principal concern of this chapter is to examine and study movements over time in labor supply. Traditional theories have sought to study the size of labor force primarily in terms of trade-offs between work and leisure; and empirical investigations have relied almost exclusively on data from cross-section evidence to test these theories.¹ The use of cross-section evidence allows for certain noneconomic factors — such as household composition — to be incorporated into the analysis, and avoids the task of modeling secular trends that influence labor supply. Thus the analysis is focused exclusively on the economics of labor supply, through the incentive to work (wages, taxation, and unemployment benefits) and through the utilization of labor (hours supplied). The main drawback of such an approach is that its findings cannot be translated easily into a time series hypothesis because it provides no understanding of the nature of secular changes in the labor supply. The heavy reliance on cross-section evidence is due in part to the fact that the data required are more readily available. The usual sources of data are censuses or surveys of households, which provide response to questions such as “did you work, or seek work, in a particular period” and thus are regarded as providing the most complete and appropriate information. Time series data are a available in the U.K. (and other countries) but the estimates are derived from statistics collected for administrative purposes and tend to be more limited in scope than censuses and surveys. Thus when undertaking time series analysis one is usually required to have some explanation of how and why administrative estimates may differ from the “true” levels.² Explicit modeling of such measurement problems becomes a major part of the analysis and draws attention to fundamental weaknesses in our understanding of the supply of labor. Above, we lack an adequately precise concept of labor supply: even answers to survey questions such as the one above provide measures that can be shown to be conceptually weak. A major part of this chapter is therefore concerned with understanding the quality of the data and an appropriate concept of labor supply.