Understanding Wage & Employment Dynamics with linked data: a new project with a new approach
18 May 2020
ADR UK has announced the funding of Wage and Employment Dynamics (WED), a project using linked administrative data to better understand wage inequality. In this blog, researchers Alex Bryson (UCL) and Arusha McKenzie (University of the West of England) discuss the challenges and opportunities WED provides.
A challenge and an opportunity
We live in the most uncertain of times. Since the 2008 Great Recession, policymakers have faced important challenges in understanding changes in productivity and wages. Now, the outbreak of Covid-19 has altered that landscape fundamentally: we face mass unemployment and unprecedented downward pressure on wages and family incomes.
With fortunate timing, the 2017 Digital Economy Act was designed to promote greater sharing of government data – including data on the labour market - allowing the development of important collaborations such as Administrative Data Research UK (ADR UK).
Among other strategic investments, ADR UK is funding the Wage and Employment Dynamics (WED) research programme. There is a buzz of excitement around plans to increase access to linked microdata from a range of sources, and the WED project is part of this. It will provide new opportunities for academics and policy researchers to explore wage and employment data in innovative and useful ways.
Who are we and what will we be doing?
Imagine being able to follow the employment status and earnings of anonymous individuals across space and time, as they move through their working lives. Imagine the insights this would enable into the factors that influence people’s prospects. It would improve our understanding of wage and employment issues, ranging from labour market entry, to job mobility and career progression, to retirement decisions.
A team of researchers from the University of the West of England (UWE) Bristol, City, University of London (CUL), UCL, and the National Institute of Economic and Social Research (NIESR) will create a wage and employment spine to do just this. We will train users on the spine and generate research findings of direct interest to policy makers.
The project is large. It brings together partners from across government who are providing data, offering insights into the dynamics of earnings and employment, and identifying policy questions. The research team will be analysing the fine detail all the way through to March 2022.
Which data and when?
At the heart of the project is the Annual Survey of Hours and Earnings (ASHE) and its predecessor, the New Earnings Survey (NES). These survey datasets derive from a 1% sample of all employees in the UK, and will be developed to provide a longitudinal research resource.
In addition, we aim to undertake six major linking projects in which we will create robust, documented linkages between the employee records contained in ASHE and external data.
Initially this will focus on:
enterprises and establishments, as contained in the Interdepartmental Business Register (IDBR);
personal and household characteristics, as contained in the 2011 Census.
In the future, we have ambitions to incorporate further de-identified data on:
educational attainment, as contained in Higher Education Statistics Agency (HESA) data;
benefits history, as contained in Department for Work and Pensions (DWP) records;
pay records, as contained in HM Revenue & Customs (HMRC) Pay As You Earn (PAYE) data;
self-employment income, as contained in HMRC Self Assessment (SA) records.
Together, these linkages will allow integrated analysis of all forms of employment income across working lives, with the capacity to address a wide range of analytical requirements. Academics, policy analysts and other users will have the right to re-use documentation, including code, without restriction but with appropriate attribution.
ADR UK’s initial funding provides for the development of the longitudinal ASHE/NES dataset and the first two linkage projects listed above. We hope to submit bids for follow-on funding for the other four linkage projects if and when this data becomes available for linking to ASHE.
A number of policy makers are lined-up to make use of the findings of the WED project. These include the Low Pay Commission, whose Chief Economist, Tim Butcher, says it will “addresses weaknesses in our evidence base”.
Whether you are an academic, a policy analyst, someone advising policymakers, or an interested member of the public, and want to know more about WED, visit our dedicated project website at www.wagedynamics.com.
This blog was written by project researchers Arusha McKenzie (UWE Bristol) and Alex Bryson (UCL). Other members of the research team are Van Phan and Damian Whittard (UWE Bristol), John Forth (City, University of London), and Lucy Stokes (NIESR). The principal investigator is Felix Ritchie (UWE Bristol).
Visit the Wage & Employment Dynamics website to stay up to date with this project.