Unlocking vital insights into the UK’s economy: The power of data linkage

Damian Whittard, who leads on Wage and Employment Dynamics project, gives an insight into why an emerging dataset which links the Annual Survey of Hours and Earnings (ASHE) to Pay as You Earn (PAYE) and self-assessment data could just help us get out of our sticky economic situation.  

The UK’s economy needs some help. The Bank of England has recently confirmed we have entered a recession, a statistical threshold with tangible effects which can be felt across the nation. With high inflation and low levels of growth, many markers of inequality are on the rise, millions are experiencing poverty, and unemployment is expected to continue rising.

And we’re not alone, the World Economic Forum has cited economic downturn, inflation, lack of economic opportunity and involuntary migration among the top ten risks in its Global Risk Report.

However, among these widespread challenges lie some profound opportunities. The transition to the green economy has the potential to open up hundreds of thousands of new jobs, enabling the transformation of the economy as we know it. Additionally, the emergence of AI, still in its infancy, is predicted to profoundly alter work life for many of us, in ways we are yet to discover.

To navigate this complex terrain, and successfully identify the opportunities among the challenges, policymakers require a good quality empirical understanding of the changing economic landscape. Here’s where the Annual Survey of Hours and Earnings (ASHE) and the new linkages to Pay As You Earn (PAYE) and self-assessment data, come in.

So, what exactly do these linkages offer?

The ASHE, held every April, provides us with the UK’s most comprehensive insight into earnings structure and distribution, by sampling 1% of employee jobs from His Majesty's Revenue & Customs (HMRC) PAYE records. The ASHE alone provides us with the tools to do some rather in-depth analysis of the state of the economy.

The new PAYE and self-assessment linkages, however, will allow us to really keep our finger on the pulse of the UK’s labour market. It will provide us with real-time information, allowing us to answer some of the most pressing questions of our time. How do people’s earnings evolve over their careers? Does carrying a student loan increase the likelihood of entering the gig economy? What are the consequences of parental leave decisions, and how large really is the gender wage gap, when considering all earned income? We can only find solutions once we can fully comprehend the problems.

There are 800,000 distinct individuals with records in HMRC datasets, this is double the number found in the ASHE alone. The opportunities presented by these linkages are extremely exciting, and with collaborative efforts among peer researchers from a range of backgrounds, the possibilities really are endless. It will give researchers a chance to produce insights which will have a real positive, lasting impact.

Get involved

This emerging ASHE linked to PAYE and Self-Assessment dataset, along with the already available ASHE linked to Census 2011 dataset,  are part of the current ADR UK funding opportunity, which is open for applications. I hope you’ll apply for funding to join us, as we uncover the answers to some of the UK’s most pressing questions.

Read more about the funding opportunity.

Find out more about the Annual Survey of Hours and Earnings linked to PAYE and Self-Assessment data – England, Scotland and Wales.