Squeezing in more neighbours and sourcing out more childcare Top of the Charts 17 February 2023 Torsten Bell Afternoon all, Our labour market inactivity problem has got serious, arriving at the centre of British politics, with Nicola Sturgeon resigning and Labour attempting to involuntarily resign Jeremy Corbyn. Amid that chaos you probably missed another Tory MP’s jumping on the ‘no way I’m standing at the next election’ bandwagon. The Government’s probably minutes away from launching a targeted back-to-work scheme for politicos, combining more help with caring for children constituents, with greater conditionality on benefits their defined benefit pensions. The weekend papers will be full of long reads on the recent past/immediate future of Scotland post-Nicola, but COTW takes a much longer view, with a century and half of the ups and downs of Scottish economics and demographics. Plus we cover the impact on your health of being the boss and on your kids of going to work. Enjoy those and have a great weekend. Torsten Chief Executive Resolution Foundation Mandarin mortality. Michael Marmot is obviously the doyen of the health inequality field. He partly got established with a famous set of studies from the 70s onwards showing top-ranked UK civil servants had better health/longevity than their subordinates. The reason? Higher status jobs come with less stress. But that’s not always the case finds a new paper (free version) on General Electric (GE) employees in the 1930s. Top level managers lived shorter lives – we’re talking three-to-five years shorter. Why might GE differ from Whitehall? Because GE bosses positions were more unstable/performance based than top mandarins. Meritocracy is stressful, even for the winners. Luckily the Resolution trustees wouldn’t just fire me tomorrow… would they? Childcare controversy. Brace for controversy… There are lots of calls for extra support with childcare right now to help further raise women’s labour market participation. This has prompted a backlash, with some asking “why will the state pay other people to look after my kid but not me”? A new study of a Finish scheme that paid mothers of children under three to stay at home wades into this row, showing it was a very bad idea… Children whose mothers stayed at home performed less well in cognitive tests and committed more crime. Some of these results are surprising (e.g. it finds the mothers’ education level makes no difference to the results) and of course Finland is not the UK (e.g. high quality public childcare exists), but in Finland at least it appears more mothers working is a win for kids and the economy. Marvellous maps. More map fun appears via a great blog from Alasdair Rae. It answers a simple question: where is the most densely population square kilometre of the UK. Harnessing the new census (and lots of robustness checks) the answer is: Bow in East London with 24,000 people. No surprise it’s in London, but the lack of much density in England’s other big cities is important to note (none of Manchester has over 15,000 people per square kilometre). Why does this matter? Because effective city size is important for its productivity levels, and that requires either truly great transport (so the city can spread) or density (remember even London’s top density is half that of parts of Paris/New York). But dense living is awful/looks dreadful some scream – well take an evidence informed view on that with a bonus blog from a keen bean who went to look at what this part of Bow actually looks like. Pretty normal is the short answer. Investigating Italy. Britain needs to sort itself out economic strategy wise to avoid becoming Italy without its weather/food. For both countries disastrous productivity growth is the problem, but Italy’s quarter century of stagnation makes our 15 years look good. For a canter through the potential root causes of Italian decline check out a new note (along with this essay) which rejects some of the usual takes (“useless Italians won’t reform/are fiscally incontinent”), before ultimately blaming the unintended impact on public/private/human capital investment of the reform agenda from the 1990s (fiscal retrenchment to support Euro membership + elements of labour market liberalisation). Combined with structural problems for the Italian economy (smaller firms) this low investment meant Italy was not in a position to adjust successfully to “the ICT revolution, the rise of China, and the integration of Eastern Europe after 2004”. Basically, Italy missed the boat. Obviously that could never happen to us. Just ask the UK’s car industry. Surveying slavery. We don’t talk about the role of the slave trade in driving the UK’s industrial revolution much (rows about high wage or abundant coal are more common). But we’re understating slavery’s role finds new work (podcast discussion here) which for the first time examines the regional distribution of slave ownership in Britain. It finds a strong correlation between industrial activity and slave wealth (measured by the compensation paid out under the Abolition of Slavery Act in 1833) with Liverpool, London and Bristol the three most heavily involved cities. The basic argument is that wealth derived from slavery helped kickstart the capital intensive growth of industrialisation (you needed a lot of cash to build a cotton mill). The paper argues the effect is big enough to boost national incomes by 3.5 per cent (a whole decade’s worth of GDP growth back then). The economic effects of slavery weren’t something that happened over there. Chart of the Week …is a brave/stupid attempt to squeeze the entire last 150 years of Scottish economics/demography into one chart. First, population, where Scotland’s share of the British population has been shrinking fairly continuously. But that straight line hides big changes over time. In the 19th Century Scotland’s population grew rapidly, just not quite as fast as England’s. But since WWI it’s been basically flat at around five million – with a fifth of that in Glasgow these days. The big recent news? For the past two decades it’s actually been growing again – as the pattern of new migration to the rest of the UK has gone into slight reverse, combined with Eastern European arrivals post-2004. The economy has been a much less stable affair. Scotland was up to its neck in the economic success of the industrial revolution (and empire), famously including Glasgow shipyards and Dundee’s jute, becoming richer than England during the early 20th century. But industrial decline kicked in earlier (the shipyards were in difficulty as soon as WWI finished). The first decade of devolution in the 2000s saw a lot of catch-up but the second has seen that reverse (having a big banking sector was more use before a banking crash than after, plus higher labour market inactivity was a pre-pandemic problem in Scotland). But don’t forget the big picture: today Scotland is richer than every English region except London and the South-East.