Death of the Phillips curve?

Here is a little graph, now rather out of date, that shows what James Banks and I thought might have happened to the Phillips Curve back in the mid-2000s.

As unemployment fell, economic inactivity rose steadily. You can see that the opposite trends expected between inflation and unemployment are not there. But the opposing trend with inflation is there if you look at economic inactivity.

The paper in which this grph appeared first was considered outrageous by social policy and sociology journals and never actually got published. I am too lazy to update it now!

Unemployment statistics: not the whole story

There have been many very interesting posts of economic trend data following the death of Mrs Thatcher. one statistic I have seen less often is the economic inactivity rate. For those who don't think a whole lot about employment figures, being 'economically inactive' is not the same as unemployed. In fact what is officially called 'the economically active' population consists of the employed, the self employed and the unemployed. You are 'active' in the labour market as long as you are looking for work,even if you didn't find any. The corollary of this is that the unemployment rate is not the % of the whole working age population who are unemployed, it is the % of the economically active population. Then there are the economically inactive, who are all those who are not looking for work. The most common reason to be inactive is that you are looking after the home and family, and this (still) mostly applies to women. The second most common reason is what used to be called 'permanent sickness', i.e. long term ill health bad enough to mean a person is not able to work. This 'permanent sickness' is what all the new rules about claiming out-of-work benefits is about. The third most common reason is early retirement. Over time, what has happened is unemployment fell and stayed low, while permanent sickness and early retirement rose. By 2005 or thereabouts, an unemployment rate of around 6% co-existed with an economic inactivity rate of 16% in men of working age.

 

Finally got the diagram into this document, phew! What a performance. What I hope it shows is how after 1995 or so, unemployment fell dramatically while economic inactivity continued to rise. This diagram is for men only, so this has nothing to do with domestic duties. Nor has it got anything to do with serious ill health, as at this same time life expectancy in men was rising fast.

A new measure of "social class"

There you go! In the first paragraph of Mike Savage et al's paper on a new model of social class they cite Richard Wilkinson and Kate Pickett as authorities on health inequality. As pointed out in my last blog, Wilkinson's work has never been about health inequality.
Anyone who read my last blog will also anticipate my reaction to using the term 'social class' to refer to cultural dimensions of social inequality. I just think it is so much less confusing to stick to calling social class what the official UK Statistics Office has defined and validated, i.e. employment relations and conditions.
But OK, let's call the new measure a measure of social position, the general term I like to use to refer to all dimensions of inequality whether they be cultural, economic or occupational.
It is great that the authors start out from a sound knowledge of Goldthorpe and colleagues clear definition and measurement of social class which has provided the present official UK measure (the NS-SEC). Why after all this do they think we need another measure?
Firstly, the NS-SEC does badly in predicting cultural activities and identities. The simple answer to this is that it is not supposed to. Whether or not a class measure based on occupation is related to cultural identity is an empirical matter. Secondly, the NS-SEC does not tell us who is in the 'elite'. I think anyone who uses it would agree with this. Thirdly, economists don't like the NS-SEC. I can surely attest to the truth of this: no record of occupation was recorded in the whole of the English Longitudinal Study of Aging (ELSA) life-grid while the sociologists took their eye off the design. Economists only think of income and wealth, not social class, which is fine, that is their discipline. Another criticism of the Erikson-Goldthorpe-Portocarrero (EGP) class schema (from which the NS-SEC is derived but in a rather distant form) is that it overdoes the manual-non-manual divide. I think John Goldthorpe would agree with this, I certainly do, and it is one reason why the NS-SEC does not have a manual-non-manual divide at all.
Perhaps the ultimate irony of the study is that the authors actually used the NS-SEC to validate their sample distribution! (page 6 Table 1). And this is the correct schema too, not the old EGP, and so it does not have any 'manual workers', or indeed 'skilled or 'unskilled' workers'. Managers are divided into 3 classes  and professionals into 2.  On the basis that the BBC audience survey (161,000 people) was biased (compared to what I wonder?) the BBC did a face to face survey with a sample of 1026 chosen to be nationally representative. It was on this representative sample that the authors carried out their multiple classification analysis of cultural capital rather than the much bigger BBC audience sample.
Seven classes emerge from the latent class analysis, the result of allowing income, wealth, house price, number and average social prestige of social contacts, highbrow culture score and 'emerging culture' score to cluster together and seeing how many groups 'naturally' emerge'. As far as I understand it, occupational title did not enter into the group of variables used to establish the classes. However, information on occupation is present in the data set so it is possible to see which occupations fall into which classes. But the classificatory criteria really are at the household level. This is different from any other social classification I know of, as all of these are based on characteristics of occupations one way or another. It would have been interesting to see a bit more information about the occupations whose members fell into several different Great British classes. Presumably it would be possible for an office worker, for example, to be in the precariat if they had no house and no savings mixed mostly with people in low status jobs and never went to the opera, and in the established middle class if they had greater income and wealth and different cultural tastes and friends.
Most interesting to me was to see that not all the other variables had a simple graded relationship to income. Table 6 shows an interesting set of relationships. For example, the 'technical middle class' has 3rd highest income and house price, but 2nd highest savings, and lowest frequency of social contacts. Traditional working class households have a higher score on highbrow culture than do 'new affluent workers' or the 'technical middle class'. Presumably this is one of the reasons why people tell me you can change your social class by, for example, saying you like a different kind of music (Morten Wahrendorf offered to lend me some jazz records).
I hope that, for now, this blog has raised some questions in people's minds.