The Impact of Institutions: The Implications of Welfare State Reforms for Human Capital and Skills

Since the 1970s, the United Kingdom has undergone transformational economic and social change. Deindustrialisation and labour market reforms may have increased labour market flexibility and the responsiveness of the labour market, but has this been at the expense of the retention of vital occupational skills? What are the long-term social and economic ramifications of these changes, and what legacy have they left in the present day?

This project seeks to answer an often-overlooked aspect of these questions: the impact of such changes on individuals in the workplace, and their contribution to individual and national prosperity – human capital and skills.

Using data stretching from 1975 to 2013, this project combines quantitative analysis with archival research and interviews with policymakers, employers and trade union leaders to trace the impact of the UK’s changing labour market on human capital and skills. The UK case is illuminated through comparison with 19 other similarly developed economies. The analysis has also been extended to China, which has enabled comparison with a very different economy. What significance do welfare and labour market institutions hold for human capital development and socio-economic inequality in a rapidly expanding economy? How do these patterns compare to the UK?

This research is valuable to policymakers and to businesses as they attempt to retain the competitiveness of British industry in an increasingly global marketplace. How can policymakers and business leaders create the institutions and conditions which provide the skills that modern industry needs?