Labour force composition and UK productivity

Peter Spencer

Discussion Papers from Department of Economics, University of York

Abstract: This paper constructs new measures of effective labour input in the UK economy. Unlike previous studies, which focus on the aggregate effect of labour quality on output, it analyses the contributions of factors such as human capital and industrial structure separately. Using data from the ONS and HMRC, numbers of employees and hours worked are weighted by labour costs, used as an indicator of their marginal productivity. The results underline the importance of investment in training and education. They also show that the reallocation of employment towards lower-productivity industries has reduced labour productivity, while regional migration has increased it. This approach provides a useful framework for analyzing structural change in the labour market and for monitoring the effect of government policy.

Keywords: Divisia index; Törnqvist index; labour quality; productivity measurement; labour composition; sectoral reallocation; United Kingdom; growth accounting; effective labour input. (search for similar items in EconPapers)
JEL-codes: C43 E24 J24 O47 (search for similar items in EconPapers)
Date: 2026-01
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Persistent link: https://EconPapers.repec.org/RePEc:yor:yorken:26/02

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