Working Paper: CEPR ID: DP1092
Authors: Charles Bean; Nicholas F. R. Crafts
Abstract: The paper contains a thorough review of explanations for the weak British growth performance of the 1950s through the 1970s and an assessment of the long-term implications of the 1980s attempt to escape from relative decline. The analysis draws on recent work in growth theory and places institutions and government policy at the heart of the growth process. We illustrate the possible adverse effects of industrial relations and social contracts on pre-1979 performance and highlight the difficulty of measuring the role of human capital. We believe the jury is still out on the implications for long-term growth potential of the post-1979 policy changes.
Keywords: economic growth; human capital; industrial relations; total factor productivity; UK
JEL Codes: J24; J51; N14; O52
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Inadequacies in workforce training and technological prowess (J24) | Slow growth in the UK (1950s-1970s) (N14) |
| Prevalence of multiple unionism (J51) | Adverse effect on productivity growth (before 1980s) (O49) |
| Absence of binding contracts (D86) | Undue pressure from unions on firms (J51) |
| Undue pressure from unions on firms (J51) | Discouragement of investment in new capital (E22) |
| Weak growth performance (1950s-1970s) (O57) | Low rates of total factor productivity (TFP) growth (O49) |
| Low rates of total factor productivity (TFP) growth + Low physical investment + Low average educational input in labor force (O49) | Weak growth performance (1950s-1970s) (O57) |
| Shift in industrial relations in the 1980s (J58) | Better growth performance (O49) |