Insights: condensed

The Insights series is an introduction to the work of the Centre for Economic Performance (CEP). Each Insight highlights the contribution of CEP researchers to both academic understanding and policymaking in one area of economics. This summary brings together the key work from each Insight.

Brexit

The UK's decision to leave the EU has had ongoing and significant repercussions. Expertise developed at CEP has contributed to understanding the impact of this unprecedented trade shock. Early CEP research helped develop the theory behind gravity models of international trade and included evidence on how geography affects per capita income and thus international inequality and the effect of tougher market competition on what products a firm decides to export. CEP trade economists assessed the impact of Brexit on the UK's trade and living standards just before the Brexit referendum and informed Office for Budget Responsibility forecasts afterwards. After the vote, work continued to investigate the impact on exchange rates and workers as well as a comprehensive analysis of the UK's economic performance.

Education

Education research at CEP has included investigating the effects of school expenditure on pupils' academic attainment, the improvement of reading skills after a highly-structured "literacy hour" was introduced for all age groups into all English primary schools, the consequences of introducing academies - schools which were taken out of local authority control and given more freedom over some aspects of day-to-day running such as their curriculum and term dates. Other research has looked at education policies involving choice and competition, post-16 vocational pathways and the effectiveness of apprenticeships.

Immigration

CEP has conducted research on the complex impacts of immigration on an economy and the experience of immigrants in the UK labour market. Research includes the impact of immigration on local labour markets and the structure of wages. Other areas of study include immigration and education, crime, the health service, and productivity of firms.

Cities and regions

The UK has been grappling with economic disparities between regions. Factors like education and skills, and agglomeration benefits play significant roles in explaining these disparities. CEP research has helped calculate the strength of the agglomeration forces, that shape the size and internal structure of cities, as distinct from other factors that make locations attractive. As people gather in cities, having enough housing becomes an issue. CEP research has looked at the consequences of restrictive planning leading to a housing affordability crisis in the UK. Beyond the UK, some of the earliest theoretical work at CEP investigated globalisation and the inequality of nations, leading to later empirical work showing how market access was important for economic development. There has also been research into role of natural characteristics, such as access to navigable water, in determining economic activity across the world.

Gender in the workplace

CEP economists have studied gender inequality in the workplace including the gender gap in employment across different countries, women's underemployment, the effect of parenthood and family policies on women's work, and the part-time pay penalty. CEP research on this topic also includes gender differences in STEM participation, the effects of the Covid-19 pandemic on women at work and the positive impact of gender pay gap reporting.

Green growth

Green growth is a key area of CEP research. This Insight highlights work on the links between innovation, growth and the transition to net zero. Researchers show how financial and managerial constraints can hinder firms' ability to adopt clean technologies or practices. Policies that promote innovation in clean technology have been studied, as well as the complementarity between product market competition and environmentally-motivated customers. Additionally, research has focused on the type of jobs needed for a sustainable recovery from the Covid-19 pandemic.

Productivity

CEP work on the UK's low productivity and its causes includes ground-breaking research on market competition and management practices. Researchers have looked at how competition spurs innovation, which in turn boosts productivity. This work has informed policymakers and resulted in new initiatives, such as the World Management Survey - a project that rigorously measures the quality of management practices in various establishments. The importance of workers' skills in boosting management practices and productivity is also outlined. The £5mn Programme on Innovation and Diffusion (POID) was launched in 2021 to conduct further rigorous research in these areas.

Wellbeing

CEP has conducted extensive research on wellbeing and happiness, contributing to the worldwide movement to go "beyond GDP" as a measure of societal success. Research includes understanding the factors that contribute to happiness, differences in wellbeing across cultures and countries and the how to measure wellbeing in a way that is useful for public policymaking. The 2006 Depression Report played an important role in bringing mental health issues to the government's attention. Following its publication, a nationwide programme to improve access to talking therapies was launched. CEP work has also covered happiness in schools and the workplace. CEP founder-director Richard Layard has been a co-editor of The World Happiness Report, a key piece of research assessing the wellbeing of countries, since its launch in 2012.

Jobs and wages

Research at CEP has addressed some of the most pressing concerns about working lives - from how to reduce unemployment to understanding rising wage inequality, the polarisation of work and the relationship between technology and the changes in the skill structure of labour markets. Researchers have also studied the effect of modern, industrial robots on the labour market. This Insight outlines the role of CEP's work in establishing the UK's National Minimum Wage in 1999 and highlights more recent research showing how changes such as the decline in union membership and the rise of the gig economy have shifted the balance of power from workers to employers.

Crime

CEP research on crime has shown how types of crime are related to factors ranging from low wages, immigration, schooling, lockdown, and unemployment benefit sanctions. Work on domestic abuse has included investigating changing patterns of abuse during the pandemic lockdowns, the link between domestic abuse, alcohol and football - and how to use machine learning to identify those most at risk. Further work by CEP analyses the impact of investing additional resources in police forces, which in one study led to between 15% and 17% fewer robberies. CEP has also published work on the deterrence effect of tougher sentencing.

Social mobility

Social mobility is a key area of CEP work. This Insight includes a look at how socially mobile the UK is, comparing the link between children's start in life and how likely they are to move up the social ladder - and how this has changed over time, in terms of income, home ownership and education. CEP researchers have also investigated how social mobility across different countries is affected by education spending. And they have looked into why social mobility in the UK and US is relatively low, compared with the Scandinavian nations. Work has also been conducted on policy ideas to improve social mobility in the UK for future generations.