The Economic and Social Research Council (ESRC) has awarded three years of funding to the Institute for Fiscal Studies to look into the reasons behind the UK’s stagnating productivity. The IFS is one of seven recipients of this funding which aims to tackle the ‘productivity puzzle’.

The IFS project, led by Research Director Professor Sir Richard Blundell, aims to ‘understand the interactions between skills, jobs and career progression, their combined role in driving inequalities in economic outcomes and their consequences for productivity.’

The research has three primary strands. The first will focus on low-and medium-paid workers and seek to identify the characteristics of jobs and firms in which less educated people succeed in pay progression.

The second strand will focus on the growing importance of self-employment and small business ownership in the UK, and will examine transitions between employment, self-employment, and unemployment and how the tax system and other policy changes affect these transitions. 

The third strand will study the role of the geographic distribution of industries and jobs for inequalities in careers and productivity, and will examine how local labour market conditions affect career progression and how local labour market difficulties caused by industrial change can have long term consequences on careers and productivity.

Commenting on the project, Richard Blundell said that finding effective ways to boost productivity is “one of the most pressing challenges facing the UK economy.”

“Improving the productivity of less educated workers is also central to addressing inequality and in-work poverty. The aim of the ambitious programme research under this initiative is to help develop effective policies to boost employment, pay, and productivity, particularly for people with lower levels of education, from disadvantaged backgrounds, or in less prosperous parts of the country.”