Jagjit Chadha's picture
Affiliation: 
National Institute of Economic and Social Research
Credentials: 
Professor of economics

Voting history

Wages and economic recoveries

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Question 1: Do you agree that lower real wage growth was beneficial for employment levels during the Great Recession?

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Answer:
Agree
Confidence level:
Confident
Comment:
Relatively more flexible labour markets in the UK meant that in the aftermath of the Great Recession real wages rather than employment took the main brunt of adjustment. Real wages are still broadly speaking at or below their pre-crisis peak, whilst employment numbers and hours have tracked output which is some 7% above the pre-crisis peak. The counterfactual can be debated as higher real wages might have meant more unemployment and also more pressure on elevated house prices leading to more mortgage delinquencies. But given the size of the shock, the labour market response was helpful with unemployment peaking at only 8.5% in late 2011.

Happiness and well-being as objectives of macro policy

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Question 2: Do you agree that quantitative well-being analysis should play an important role in guiding policy makers in determining macroeconomic policies?

 
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Answer:
Disagree
Confidence level:
Confident
Comment:
We do use well being analysis because we tend to examine the welfare of the median household using their utility function when we try to understand the implications of different policy plans. That said there may be case for looking at the utility of different parts of the income and wealth distribution but that should be related again to the utility function not some ad hoc subjective construct.

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Question 1: Do you agree that subjective well-being measures, or at least some of the subindices from the typical survey measures, are now reliable enough to give useful insights when used in macroeconomic empirical analysis?

 
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Answer:
Disagree
Confidence level:
Confident
Comment:
I am not at all sure that subjective measures or the self-reported sense of well being measure accurately material progress. if we are trying to understand output, income or expenditure there are other more obvious problems in the measurement of a digital, service sector economy.

A “new” UK industrial strategy ?

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Question 2: Do you agree that the UK needs a new regional policy?

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Answer:
Agree
Confidence level:
Confident
Comment:
Regional divides have been a staple of conversation in the UK since at least the 1980s. They are part of the story behind the referendum result of last year. We need to create more regional centres of employment and industrial excellence. Again we need to look carefully at each region or sub-region to try and understand what exactly is missing.

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Question 1: Do you agree that the UK needs a new industrial policy?

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Answer:
Agree
Confidence level:
Confident
Comment:
We certainly need to think about how develop collaborations between the private sector, the knowledge base and government. But I do not yet know what now mean by an industrial strategy: picking winners may freeze the economic structure and distort incentives. The real policy may require micro or regional level analysis of public good and financial constraints faced by industries.

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