This morning I have mostly been investigating the thesis of @billwells_1 - that UK employment usually changes/rises in a way largely independent of GVA. And I find he is right, which may have implications for productivity ... See these sectors, for example: 1/4
If employment is just "doing its thing", rather than (quickly) responding to GVA or GDP, it means that GDP/L, the measure we most often use for productivity, on any one year will be v correlated with GDP. And look - easy to see 2/4
I am wisely warned not to over-interpret these patterns. I also warn others not to act like you can just pull a lever and increase demand in sector X or Y. But in the short term, it does justify Bill's saying - productivity is just a residual. And ... 3/4
... this also warns us against seeing it as 'stuck'. It doesn't mean there is an easy demand-side solution, though. And it is worth investigating Bill's observation. Why, e.g., does employment rise in the arts sector despite a lack of similar demand growth there? 4/4
(My answer, fwiw: we imagine the nature of jobs as more fixed than they are, but they respond endogenously to *the quantity of labour available*. Create an economy with abundant cheap labour , you create different kinds of job. See @MESandbu book and car-washing example)

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More from @Gilesyb

28 Jul
Josh and BrightBlue have written an astonishingly comprehensive report into how Carbon prices should work, including solid implementable steps.

This thread is great but cannot do the report justice - well worth reading. My very brief thoughts: 1/
Really like the three principles.
1. Carbon pricing is about behaviour change, not necessarily revenue raising.
2. Needs to be fair to avoid gilet jaunes issues
3. It is just a piece of the puzzle, not the whole jigsaw 2/
(am particularly keen on that last principle: the refuge of the lazy laissez faire thinker - like a particular former chancellor- is "just put a price on carbon, the market will fix it." No. It. Won't. But the price helps) 3/
Read 5 tweets
18 Jul
Imagine an economy of restaurants, randomly trying different styles. Their outcomes range across a distribution. The winners create jobs, profits and annoying columns about their brilliant entrepreneurialism. The losers go bust. Restaurant eating rises in line with GDP 1/5
Bad policy wonks come along, and look at the top quartile. "If the median performance could match the top restaurants, the industry would be X% bigger" they opine. But of course they can't, not in terms of sales. Orders at Bob's Pizza take from orders at Sheila's Fish 2/
A lot of sectoral/regional analysis of growth hits this fallacy*. Even when someone calculates how much richer society would be if everyone had higher education. The sum of social gains *isn't* the sum of each individual's gain. What was gained at the expense of another? 3/
Read 6 tweets
16 Jul
Here are some staggeringly obvious points about Gross Value Added, employment, and therefore productivity (the first divided by the second). But they might lead to some insight into manufacturing, demand, etc following the excellent @jeegarkakkad thread yesterday 1/9
If you have only data on GVA and employment (L), and want to explain movements in GVA/L (prod), you can quickly see which plays the bigger role. It is GVA, full stop. See these charts, for Total UK economy ... 2/ Image
... and also for Professional Services...3/ Image
Read 10 tweets
30 Apr
Bemused southern Remainers like me, about to be befuddled by the Hartlepool poll result, need constant reminders that there are lots of people who really, genuinely, honestly think that the Government did them a massive favour by pushing through Brexit ...
.... rather than, say, that a bunch of wilfully self-destructive people perversely chose to vote against their own interests to punish remote, elite others from the privileged south in an irrational spasm of cultural spite and are still somehow enjoying their vandalism
Why they still think Brexit is helping them is still beyond me, but that they do is surely undeniable
Read 4 tweets
9 Apr
Capital invested in manufacturing, 1998-2017
I suspect there is something iffy about the Italian numbers for capital invested.

Output tells a more truthful story: compare UK and Italy now (oh, and Germany)
Sorry, HERE is the fascinating UK Manufacturing story
Read 4 tweets
8 Mar
OK, long overdue, overlong thread thinking about Rachel's fundamental question here. My first reaction was to see what I have learned from the responses to my original tweet; is the answer necessarily "more business investment"? 1/18
1st obvious point: not necessarily. Biz inv can be wasted. More formally, it depends on your on marginal productivity of capital, depreciation, etc. Here a chart from a toy model where you pass quite soon the point at which more saving into capital no longer> higher wages 2/
A point @t0nyyates put neatly here,
There is an optimal K/L. But as others point out it is highly suggestive that we went below that overall level 3/
Read 19 tweets

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