BRITAIN'S SKILL PROBLEMS AND REMEDIES

Britain's Skill Problems And Remedies

Britain's Skill Problems And Remedies

The traditional patterns of labor mobility in British and French shipbuilding regions described above were profoundly transformed by economic and political changes after the Second World War. The state in each country intervened in the economy on an unprecedented scale, significantly altering intersectoral patterns of capital investment and labor deployment. At the regional level, industrial structure and conditions of labor supply were altered in ways that encouraged employers to pursue new strategies towards their workers. (Acemoglu 2009:96-15)

In Britain, by the mid-1960s, competition for skilled labor from rising new industries was leading shipbuilding employers for the first time to offer their workers employment guarantees.

The traditional pattern of a high degree of interyard mobility for occupationally specialized workers was rapidly disappearing. In France, the breakdown of the traditional symbiosis between agriculture and industry was also leaving shipyard workers increasingly dependent on individual yards for their employment prospects. In order to explain these developments the discussion turns first to the wider forces generating changes in the composition of regional labor supply. (Acemoglu 2009:96-15)

The immediate post-World War II years were a period of rapid industrial growth in France by historical standards. Industrial output grew at 5.3 percent per annum between 1949 and 1963, a rate only previously attained during the boom preceding the First World War and between 1924 and 1929.xxxviii This expansion took place in the context of a virtually stagnant working population. Between 1946 and 1962 the work force nationally increased by a mere 1.6 percent, from 19.4 to 19.7 millions. The labor for industrial expansion came primarily from agriculture, and also to an extent from interindustry shifts from declining to expanding sectors.

In the case of the British industries, labor supply problems had an entirely different basis. Rather than the problem of attracting additional labor for industrial growth as in France, the difficulties of British builders stemmed from increasing competition for skilled labor from rising new industries. During the 1950s, while the output of the shipbuilding industry and other traditional staples stagnated or declined, such sectors as vehicles, electronics, and chemicals expanded rapidly. By the mid-1960s the traditional dominance of shipbuilding and connected industries in the regional economies of Clydeside and the northeast coast of England was being progressively undermined. (Acemoglu 2009:96-15)

Skill-biased technological change has played a central role in recent research on increased inequality in the wages of skilled and unskilled workers2, and on the slowdown in productivity. One characteristic of this literature is the assumption that skill-biased technological change is exogenous. In the literature on rising wage inequality, this exogeneity is reflected in the fact that the attribution of rising inequality to skill-biased technological change basically amounts to assigning the residual, unexplained increase in inequality to skill biased technology, rather than examining the factors that contribute to the adoption of skill biased technologies and relating these factors to rising inequality. This paper takes a first step towards consideration of factors contributing to skill-biased technological change by presenting a ...