Activity Rates and Unemployment: The Experience of the United Kingdom 1951-66.

This paper is concerned with the relationship between activity rates and unemployment in the United Kingdom, in the period 1951-66. An activity rate is usually defined as the percentage of a particular population who are in the labor force. These rates are used in the context of utilization of labor resources, often being cited as evidence of the under-utilization of scarce manpower. Contemporary interest in the facts about British activity rates has grown as the economy enters what is apparently a period of chronic labor shortage. Recent forecasts indicate that only very small increases in the working population are likely in the next decade because of the low birth-rate in the early fifties combined with the possibility of a rise in the school leaving age and the reduction in the rate of immigration. The object of this paper is to see whether the changing pattern of activity rates observed in the U.K. over the period 1951-66 is connected with the fluctuating pattern of unemployment, and to attempt some tentative estimates of disguised unemployment. There are, of course, many other aspects of activity rates which one could examine. Any change in the economic alternatives available to the household as a decision making unit, for example, the prices of durable goods, pension facilities or other social security payments, are likely to affect the three-fold choice amongst leisure, unpaid work and paid work, and so change the propensity of the population to take up paid work in the labor force. It is these sorts of influences that we would expect to correlate with the secular trace of activity rates-if (and here it is a matter of empirical evidence)-economic variables do have such an effect.