For some reason maths isn’t often seen as the fascinating subject it is. It allows us to build bridges, measure stars, play hopscotch, make cars, cook; the list seems endless. Economics uses maths to frame and test its theories.

The Radio 4 show More or Less which “is devoted to the powerful, sometimes beautiful, often abused but ever ubiquitous world of numbers” asked well-known guests and contributors to say why they love numbers. The short films include Konnie Huq, Vince Cable and Rick Edwards.

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Increased public spending on incapacity benefits, health and pensions can all help the economy recover in a slowdown or recession. That is one of the findings of new research by Professors Julia Darby and Jacques Melitz presented at the Royal Economic Society’s 2008 annual conference.

In a slowdown some policies help the economy recover automatically. A recession increases the total amount spent on unemployment benefit (as more people are claiming it) and reduces the total tax take (as people’s tax bills drop). This helps to stimulate the economy without any active government intervention.

The report finds that these automatic stabilisers play an even greater role smoothing the business cycle than previously thought. This is because programmes such as incapacity benefit, pensions and health spending all act as such stabilisers as well.

In fact, active government intervention may even destabilise the economy if it doesn’t properly take account of these automatic effects.

These benefits are likely to help prevent recession as spending on each of them grows as a slowdown starts:

• Pensions: workers tend to retire at an earlier age in recessions and at a later age in booms. So pension payments are higher in recessions and lower in expansions. This is partly because employers encourage older workers to retire in recessions, as they are relatively more expensive to employ.
• Health spending: older workers are also likely to be those with bigger health problems. Those who retire earlier in recessions may have especially severe health problems. In addition, retired people have more time to devote to health care. So health spending may increase in a recession.
• Incapacity benefits: in the UK (among other countries), workers who are laid off in a recession and who qualify for incapacity benefit may turn to it instead of unemployment benefit. These have increased substantially over the last 25 years: total spending on such benefits is about 30% more than that on unemployment benefit across all developed countries.

These automatic stabilisers play an important role in stabilising economies in the OECD. For every pound reduction in output in a recession, it is generally thought that close to 50p flows right back to the private economy automatically through a fall in tax revenues and a rise in government spending.

This report shows that the contribution of government taxes and spending to automatic stabilisation is even higher than is generally thought. Significant contributions are also made through cyclical movements in retirement benefits, public health spending and invalidity benefits.

The contributions from these other sources of social spending are more than twice as high as those coming from unemployment compensation alone. As a result, following a fall of one pound in output, private income only goes down by 40p at most rather than by 50p on average.

This means that we tend to exaggerate the role of active fiscal policy in stabilising developed economies. The government gets too much credit for the automatic forces at work.

Moreover, we know from past studies that fiscal policy can sometimes destabilise the economy. During booms, this policy can occasionally overheat the economy by generating deficits. Based on their results, the researchers argue that such destabilising behaviour is actually even greater than previously thought since the behaviour was strong enough to overcome forces that now seem more powerful.

The study also has implications for the European Union’s Stability and Growth Pact. If automatic stabilisation is greater than generally believed, then staying within the 3% deficit limit is more difficult than previously thought during recessions. This may explain some of the difficulties that countries like France, Germany, Italy and Portugal have encountered in their efforts to meet the deficit ceilings in the last eight or nine years.

Notes for editors: Labour Market Adjustment, Social Spending and the Automatic Stabilisers in the OECD by Julia Darby and Jacques Melitz was presented at the Royal Economic Societyâ’s annual conference at the University of Warwick, 17-19 March 2008.

Julia Darby is at the University of Strathclyde. Jacques Melitz is at Heriot-Watt University.

For further information: contact Julia Darby on 07971 681210 (email: julia.darby@strath.ac.uk); Jacques Melitz on 0131 451 3626 or by email (J.Melitz@hw.ac.uk); or Romesh Vaitilingam on 07768 661095 (email: romesh@compuserve.com)

Read more research papers by Jacques Melitz at EconPapers. Intute: Social Sciences features more Internet resources on the topic of economics.

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Parents who are active in various kinds of clubs “from sports to charities, from political parties to religious groups“ may raise the test scores of their children. That is the central finding of new research by Professor Sarah Brown and Dr Karl Taylor presented at the Royal Economic Society’s 2008 annual conference.

The report uses data from the National Child Development Study, which has tracked the lives of a representative sample of the British public born in a single week in 1958. It finds that the test scores of children in reading, mathematics and vocabulary tests are positively related to their parents’ level of social participation.

What’s more, the authors argue, this is more than chance correlation. By looking at the activities of parents at the age of 23 and their children’s test scores a decade later, they conclude that a higher level of social activity actively raises children’s attainment.

The relationship between education and social interaction is not surprising since education plays an important role in developing the social skills of children. Reading and writing (for example) are crucial for the ability to communicate and hence engage in social interaction later on in life.

The authors analyse the relationship between social interaction and educational attainment using British cohort data. In particular, the authors explore the relationship between a parent’s level of social interaction (as measured by club membership) and their child’s academic development.

The different types of clubs analysed include: political parties, environmental charities, other charities or voluntary groups, women’s groups, townswomen’s guilds or women’s institutes, parental or school organisations, tenants’ or residents’ associations, trade union or staff associations, and religious organisations.

Because family background is an important determinant of educational attainment, one might predict that the level of formal social activity undertaken by an individual may influence the academic development of their children. Social interaction outside the family may lead to parents being able to access the support and assistance of other individuals and, hence, may benefit parents in bringing up their children.

The study explores whether the children of parents who report relatively high levels of social interaction report relatively high levels of academic achievement.

Children’s scores in reading, mathematics and vocabulary tests are positively associated with the extent of their parents’ formal social interaction thereby highlighting a hitherto neglected influence of social interaction. The results suggest that a lack of social interaction may have adverse intergenerational effects in terms of educational attainment.

Children of parents who engage in relatively low levels of social interaction attain relatively low scores in reading, maths and vocabulary tests. These findings are not affected by how much social interaction exists within the family as well as the social interaction of the child outside the family.

Notes for editors: ˜Social Interaction and Children’s Academic Test Scores: Evidence from the National Child Development Study” by Sarah Brown and Karl Taylor was presented at the Royal Economic Society’s annual conference, 17-19 March 2008.

Sarah Brown and Karl Taylor are at the University of Sheffield

For further information: contact Sarah Brown on 0114 222 3404 (email: sarah.brown@shef.ac.uk); Karl Taylor on 0114 222 3420 (email: k.b.taylor@shef.ac.uk); or Romesh Vaitilingam on 07768 661095 (email: romesh@compuserve.com).

Read more research by Karl Taylor at EconPapers. Intute: Social Sciences features more Internet resources on the topics of the economics of education, economics of the family and economic sociology.

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Highly educated parents responded more strongly to the controversial study linking the measles, mumps and rubella (MMR) vaccine to the development of autism in children. That is the central finding of new research by Professor Dan Anderberg and colleagues presented at the Royal Economic Society’s 2008 annual conference.

Whats more, the study finds, these parents were less likely to have their children vaccinated against other diseases after the controversy, not just MMR. Since there was never any suspicion of doubt about other vaccines, this may have put the health of their children at risk.

The publication of medical research linking the MMR vaccine to autism in The Lancet in February 1998 sparked a decade-long controversy about the triple jab. Following the initial publication, the uptake rate of the MMR vaccine dropped from 92% in 1997/98 to 80% in 2003/04.

The new report examines how the response to the MMR controversy varied between parents with different levels of education. It reveals that:

• Before 1998, highly educated parents were up to 8% more likely to take up the MMR vaccine than parents with lower education.
• By 2002, this gap had not only closed; it had actually been reversed, with highly educated parents being 2-3% less likely to accept the MMR vaccine.
• Most of the relative decline in the MMR uptake by highly educated parents occurred soon after the controversy broke when the media coverage was still relatively low.
• After the increased media attention in 2001 and 2002, there were no discernible differences in trends across educational groups.
• The controversy also appears to have had effects on the uptake of other childhood vaccines: after 1998, highly educated parents also reduced their relative uptake of other non-controversial childhood vaccines.

The original research publication described a set of bowel symptoms and suggested a link to autism. The study included eight children whose parents said they had developed normally until they were given the MMR, and then had begun to regress. Dr Andrew Wakefield, the lead researcher suggested that children should be given the three vaccines separately rather than the combined MMR jab.

In the following years, a substantial body of research failed to verify any link between the vaccine and autism, and successive research reviews concluded that the vaccine was safe. The controversy nevertheless led many parents to worry, and the MMR uptake rate fell far below the 95% immunity rate required to stop measles from being able to spread.

The new report uses data on the uptake of immunisations collected at the Health Authority area level, which the authors combine with population characteristics from the Health Survey for England. The authors also use data from the Millennium Cohort Survey, which contains information on 8,000 English children due to obtain the MMR at the height of the controversy.

The finding that more educated parents had, at the peak of the controversy, a lower uptake rate is remarkable: generally higher educated parents are more likely to vaccinate their children.

The relative decline in uptake by highly educated parents also potentially has wider significance. Generally speaking, individuals with more education have better health. This is possibly because they are better informed about how to achieve better health outcomes. The finding that highly educated parents were the first to react to the information that the MMR had potential side effects is consistent with this hypothesis.

More puzzling is the finding that highly educated parents also reduced their uptake of other non-controversial childhood vaccines. One explanation for this is that they reacted to the overload theory, which states that too many vaccines, and multi-component vaccines in particular, could potentially be harmful to infants, a theory that was expressed at the time by Dr Wakefield and some of his colleagues.

Notes for editors: Health and Knowledge: The UK Measles, Mumps and Rubella Controversy by Dan Anderberg, Arnaud Chevalier and Jonathan Wadsworth was presented at the Royal Economic Societys annual conference at the University of Warwick, 17-19 March 2008.

The authors are at Royal Holloway, University of London. Arnaud Chevalier and Jonathan Wadsworth are also members of the Centre for Economic Performance at the London School of Economics.

For further information: contact Dan Anderberg on 01784-414082 (email: Dan.Anderberg@rhul.ac.uk); Arnaud Chevalier on 01784-414971 (email: arnaud.chevalier@rhul.ac.uk); Jonathan Wadsworth on 01784-443464 (email: j.wadsworth@rhul.ac.uk); or Romesh Vaitilingam on 07768-661095 (email: romesh@compuserve.com).

Read more research by Dan Anderberg at EconPapers. Intute: Social Sciences features more Internet resources on the topic of health economics.

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In the wake of Alistair Darlin’s swingeing increases on duty on alcohol in Wednesdays budget comes a new report examining why duty may not have been increased as much as governments would have liked and implying that these new duties may not raise as much revenue as the Chancellor is expecting.

The research by Giuseppe Migali and Ben Lockwood, presented at this Royal Economic Society’s 2008 annual conference, finds that the completion of the European Unions single market which removed all restrictions on trade in goods between member countries meant that the UK government has not been able to raise alcohol and tobacco duty as much as it might like.

The single market benefited smokers and drinkers who were able to go to France and take advantage of lower taxes. But the study shows that even those who did not travel benefited. This is because the government could not raise taxes without encouraging more people to shop or shop more frequently abroad. So duty is lower than it might be otherwise, which benefits all smokers and drinkers.

The single market may also explain why (at least until Wednesday’s budget) alcohol taxes in particular have failed to keep pace with inflation since the introduction of the single market. If so, the single market has reduced the governments ability to tackle binge drinking through higher taxes.

The completion of the EU’s single market in 1993 resulted in the removal of trade barriers between member states. It also meant a change in commodity taxation. Specifically, EU residents buying goods in another EU country were now taxed at the rate of the country of purchase, not where they resided.

This change allowed cross-border shopping. High taxes on portable goods in one country might not raise as much money, or deter as much consumption as they did before as shoppers could simply shop abroad. Many UK smokers and drinkers took advantage of the opportunity to buy alcohol and tobacco in France, which has much lower taxes on these products than the UK.

In particular, high taxes on certain products (tobacco and alcohol) may drive shoppers from high-tax countries such as the UK, to buy portable goods in low-tax countries, such as France. There is in fact evidence that both cross-border shopping and smuggling are occurring on a large scale across some borders. The rates of excise duty on alcoholic drinks and tobacco products in the UK are significantly higher than those in most other EU member states, notably France.

Five years after the start of the single market, the estimated loss of revenue to the UK government from legal cross-border shopping was around £375 million a year. In 2003/04, 10.5 billion cigarettes were successfully smuggled and a further 6.5 billion were purchased across a border with a loss of £3.1 billion to the UK Treasury.

There is concern that governments have been cutting rates of excise tax or at least not raising them in line with inflation in response to such behaviour. The authors study the setting of excise taxes on still and sparkling wine, beer, spirits and cigarettes by 12 EU member countries over the period 1997 to 2004. They investigate whether the way a particular country say the UK responded to the excise taxes set in other EU countries differed before and after the single market.

The report finds little evidence that governments were concerned with taxes in their neighbours before the creation of the single market in 1993. Indeed, it finds that there is evidence of this only for the tax on cigarettes.

The picture is different after 1993, when all five taxes seem to be influenced by tax levels in neighbouring countries. Specifically, a 1% increase in the weighted average of foreign taxes increases the home (UK) tax by the following amounts: 0.43% for still wine, 1.21% for sparkling wine, 0.31% for beer, 0.68% for spirits and 1.32% for cigarettes. Even the influence of foreign cigarette taxes on home cigarette tax is more than double the level it was before 1993.

These results are not sensitive to how much weight is placed on taxes of different foreign countries taxes. But the researchers assume that countries only react to taxes in other countries where there is a shared geographical border that shoppers can cross.

Finally, the researchers investigate the effect of minimum tax rates set by the EU on actual taxes set by governments. There is some evidence that higher minimum tax rates increase the amount of strategic interaction between countries.

Notes for editors: Did the Single Market Cause Competition in Excise Taxes? Evidence from EU Countries by Giuseppe Migali and Ben Lockwood was presented at the Royal Economic Society’s conference at the University of Warwick, 17-19 March 2008. Migali is at Lancaster University. Lockwood is at the University of Warwick.

For further information: contact Giuseppe Migali on 015 2459 4221 (email: g.migali@lancaster.ac.uk); Ben Lockwood on 024 7652 3277 (email: b.lockwood@warwick.ac.uk); or Romesh Vaitilingam on 07768 661095 (email: romesh@compuserve.com).

Read more papers by Ben Lockwood at EconPapers and search for more Internet resources on this topic at Intute: Social Sciences which has more on taxes and taxation.

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But the authorities should not always aim to prevent bank runs on the contrary, when regulators cannot monitor banks and fine those that are behaving irresponsibly, the possibility of bank runs is needed to prevent banks from lending irresponsibly in the first place.

In September 2007, Northern Rock suffered the first bank run on a British bank in over a century. The spectacle of depositors queuing up in front of the high street branches of the Northern Rock has prompted much commentary on the stability of the financial systems and the global consequences of the subprime crisis in the United States.

Bank runs are driven by coordination failure: if each depositor fears that other depositors are about to withdraw their deposits, they rush to withdraw their deposits before the bank runs out of cash.

Preventing bank runs driven by depositor coordination failure can be achieved if each individual depositor can be credibly assured that even if all other depositors withdraw, their deposits will continue to be safe. The British government gave such a guarantee to depositors in Northern Rock.

The report shows that without effective regulation, the risk of a bank run is required to stop reckless lending by banks. Even though depositors know a bank run might occur, they still deposit their wealth with banks as the benefits from doing so are potentially greater than the risks. So banks improve on a situation with no savings at all, but they also create the risk of a crisis.

Although intervention by central banks or government agencies takes place typically after the onset of a crisis, the report recommends a policy framework where plans for a contingent intervention regime are put in place before a crisis breaks.

Such an intervention regime would involve a prior commitment by a public authority (such as a central bank or a fiscal services regulator) both to monitor bank actions if liquidity suddenly dried up and followed this by a threat of fines if irresponsible behaviour is revealed.

The report shows that the threat of monitoring and confiscation of bank payoffs deters opportunistic behaviour, even before any crisis breaks. In this way, the regulatory authority can reduce costly intervention after a crisis such as guaranteeing each individual deposit.

In addition, the government would not necessarily have to regulate all banks in a liquidity crisis: just those that were judged to be most at risk (as Northern Rock, with its limited depositor base was).

Notes for editors: Liquidity, Moral Hazard and Bank Runs by Shurojit Chatterji and Sayantan Ghosal was presented at the Royal Economic Society conference at the University of Warwick, 17-19 March 2008.

Shurojit Chatterji and Sayantan Ghosal are at the University of Warwick.

For further information: contact Sayantan Ghosal on 024 7652 3042 (email: S.Ghosal@warwick.ac.uk); Shurojit Chatterji on 024 7657 5749 (email: Shurojit.Chatterji@warwick.ac.uk); or Romesh Vaitilingam on 07768 661095 (email: romesh@compuserve.com).

Read more papers by Sayantan Ghosal at EconPapers and search for more Internet resources at Intute: Social Sciences on the topic of banks and banking.

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Some providers of digital products, such as software, music and film, may turn a blind eye to or even encourage piracy of their goods, according to new research by Karen Croxson presented at the Royal Economic Society’s 2008 annual conference. They do this because while piracy may harm sales, it can also serve to provide free marketing, helping to create buzz about a product.

The most high profile example of buzz is the Arctic Monkeys, a British music group, which distributed its initial songs freely online. But firms in other industries may benefit from the same effect. Makers of office software such as Microsoft may enjoy a net benefit from piracy: business users are unlikely to copy the product, and others who copy it would not have bought it anyway. Thus, the main effect of piracy is extra cheap promotion, and this in turn may explain why copy protection applied to office software is relatively weak.

In some other markets, the presence of a free copy may result in many consumers who would have bought finding themselves tempted instead to download the product for free. Piracy will undermine legitimate sales in such cases, without necessarily raising consumption: there may be no free extra buzz. This is the more likely scenario in the market for console games, the study suggests, and this helps to understand why companies such as Sony or Nintendo, which make console games, invest heavily in copy protection.

The rise of digital piracy

Developments in computing and the internet have had many liberating effects. End-users can now acquire near perfect copies of many creative works, and often can do so instantaneously (though not entirely without cost). The unauthorised copying of digital goods such as software, music and films a practice referred to as digital piracy has been claimed to place in peril the viability of whole industries. With perceived losses running so high, one might expect to see all sellers moving mountains to safeguard their intellectual property technologically. In fact there are some puzzling differences in attitudes.

Makers of console games such as Nintendo and Sony invest heavily in draconian anti-piracy measures (their systems are notoriously difficult to crack). But providers of office software such as Microsoft have publicly referred to the casual copying and softlifting of their products, seemingly admitting that these are more easily replicated. There is even evidence that business software manufacturers reduced copy protection following the arrival of personal computers in the 1980s.

The analysis in this research report confirms that piracy can displace sales but highlights the importance of being realistic about this: not every copy implies a lost purchase. In any market there are some who value the product but never would buy (perhaps children with limited pocket money) and their piracy poses no threat to sales.

Given that the cost of piracy is likely to come down to a personal calculation (related to such things as the value of time, fear of penalties and moral costs), there may be variation across markets in the genuine sales threat the temptation to pirate by those who would otherwise buy. This goes some way to explaining protection differences.

In addition pirates may help promote the products they steal and this too may weigh on protection decisions. Both bought and pirated software spreads information about a product in guerrilla fashion. Word-of-mouth communication, what marketers sometimes term ‘buzz’ can drive sales success.

Indeed, the sudden rise from obscurity of the Arctic Monkeys attests to the power of buzz: the instant success of the music group’s first album was due not to traditional marketing muscle but to the energy of early consumers who hyped its songs through social networking site myspace.com.

The study brings together these two effects business stealing and promotion. It shows that in markets where the former is more important, firms are more likely to invest in copy protection measures. But in some other cases promotion could be the dominant consideration, and there firms will be less likely to invest heavily in copy protection.

Consider computer games. Many games are targeted at, and probably most valued by, a youth market. Yet the piracy costs of young people may be small, not least because they have more free time and forgo less income by spending time on piracy. In such a market, copying can undermine sales without generating extra promotional benefits (those who pirate would have bought anyway), and this can help explain the drastic protection measures applied.

Contrast this to the market for business software: professional users attach higher worth to office software than do, say, students. At the same time, they are likely to have higher piracy costs (owing to a higher monetary value of time and conceivably greater concern about legal repercussions). With valuable users shying away from copying, the seller in this market finds itself more naturally insulated against lost sales. Moreover, those who pirate, many of whom probably wouldn’t have purchased, represent (virtually) free promotion. A weak appetite for protection is more intelligible in this light.

Promotional Piracy by Karen Croxson was presented at the Royal Economic Society’s annual conference at the University of Warwick, 17-19 March 2008. Karen Croxson is at Oxford University.

For further information Karen Croxson on 01865 279484 (email: karen.croxson@economics.ox.ac.uk); or Romesh Vaitilingam on 07768 661095 (email: romesh@compuserve.com).

Read more papers by Karen Croxson at EconPapers and search Intute: Social Sciences for more on the topics of piracy, copyright and electronic commerce.

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Mothers who smoke during pregnancy will have smaller babies. But much of the harm is due to unobservable traits of the mother. If mums stub it out by the time they are five months pregnant, the damage is as good as undone.

At the same time, the lasting harm to babies is greatest if the mothers have low education. So a much more holistic approach to improving child health in pregnancy is needed to help thousands of children break out of the poverty trap.

These are the conclusions of extensive new research by Emma Tominey, presented to the Royal Economic Society’s 2007 annual conference at the University of Warwick, 11-13 April.

Babies born to women who smoke will typically be 5.4% (6.5oz) lighter than other babies. But around half of this damage is because of unobservable traits of the mother. This means that stopping mothers smoking during pregnancy is important, but it is only half of the battle.

So while the effects of being a small baby stay with a child throughout its life, affecting its health, education and earnings potential, stopping a mother from smoking must be combined with helping her to be healthier in other areas of her life.

But for the harm that remains, the low educated mothers are hardest hit. Children born to mothers who left school at the age of 16 suffer double the harm for each cigarette smoked. The government must target its policy directly at these low educated families.

Women who do smoke in the early stages of pregnancy should not be ‘written off’ as ‘too late’. Surprisingly, the research shows that the harm to the baby is essentially reduced to zero if the mother quits by month five of the pregnancy.

This is much longer than conventional wisdom and previous research has suggested and tells us there’s more time than we thought to help the mothers change their behaviour during pregnancy.

The study is based on research into the lives of 6,500 children and their mothers, and went into exceptional detail of the mother’s lifestyle over her lifetime. The mothers were tracked from their child’s birth until the age of 42.

The research suggests that while previous studies have identified a link between smoking and low birth weight, none has looked in such depth at whether the experiences of the mother can alter this and how the harm accumulates during pregnancy.

The study calls on the government to alter radically its policy on helping pregnant women quit smoking, developing a more holistic approach to improving the health of these children during pregnancy and targeting the children of low educated mothers.

Notes for editors: Maternal Smoking During Pregnancy and Child Birth Weight by Emma Tominey was presented at the Royal Economic Society’s 2007 annual conference at the University of Warwick, 11-13 April.

Emma Tominey is at University College London.

For further information: contact Romesh Vaitilingam on 07768-661095 (email: romesh@compuserve.com).

Read more papers by Emma Tominey at EconPapers and search for more Internet resources on the issue of Women and Economics at Intute: Social Sciences.

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No matter what qualifications they have or how big their family is, British women face a substantial occupational penalty if they work part-time. That is the central finding of new research by Victoria Prowse, presented to the Royal Economic Society’s 2007 annual conference at the University of Warwick.

This finding is consistent with an inadequate supply of high quality part-time jobs to suitably qualified women, and provides support for the introduction of incentives for the firms to increase the number of part-time jobs in skilled occupations.

The study also finds that women with children who enter the labour market have higher occupational attainment, and experience a smaller occupational penalty, than childless women. Thus, there is no evidence whatsoever of women with children (the majority of whom work part-time) being any less career-focused than women without children.

It is well known that part-time jobs in the UK are concentrated in poorly paid, low skilled occupations such as catering and retail. This study estimates that between 1974 and 2000, an average of 76% of women in full-time jobs were working in non-manual occupations while on average only 56% of women in part-time jobs were working in non-manual occupations.

The study draws on data from the National Child Development Survey in order to build up a picture of the employment choices and occupational attainment of British women between 1974 and 2000. It finds that:

• Holding a university degree reduces, but does not eliminate, the part-time occupational penalty.
• Women with children who enter the labour market have higher occupational attainment, and experience a smaller occupational penalty, than childless women.
• But irrespective of qualifications or family size, all women experience a significant part-time occupational penalty.

A university degree reduces the occupational penalty suffered by women in part-time work: among women aged 24 with no qualifications, those in full-time work are 27 percentage points more likely than part-timers to be working in a non-manual occupation.

In contrast, among women holding university degrees, those in full-time work are only 18 percentage points more likely to hold a job in a non-manual occupation. Therefore, although highly qualified part-timers suffer a substantial part-time occupational penalty, it is far less than that suffered by women with lower levels of qualifications.

The presence of children in a woman’s household also has implications for her occupational attainment. Women with children are more selective in terms of the quality of jobs that they are willing to accept than childless women: conditional on being in either full- or part-time employment, women with children are on average 10 percentage points more likely than childless women to be employed in non-manual occupations.

Thus, there is no evidence whatsoever of women with children being any less career-focused than women without children. Interestingly, this selectivity effect is greater for women in part-time jobs than those in full-time jobs. So the low occupational attainment of women in part-time work cannot be attributed to low occupational ambitions among women with children, the majority of whom work part-time.

Despite variation in the part-time occupational penalty across women with different levels of education and with different family sizes, all women experience a substantial part-time occupation penalty: after controlling for differences in individual characteristics, women in part-time work are on average 14 percentage points less likely than full-time workers to employed in non-manual occupations.

This finding is consistent both with the presence of a constraint on the supply of high quality part-time jobs and with women in part-time employment having a strong preference for jobs in low occupations. To the extent that there is a constraint on the supply of high quality part-time jobs to suitably qualified women, there are grounds for policy interventions aiming to equalise the occupational opportunities of women in full- and part-time employment.

Notes for editors: Part-time Work and Occupational Attainment Among a Cohort of British Women by Victoria Prowse was presented at the Royal Economic Society’s 2007 annual conference at the University of Warwick, 11-13 April.

Victoria Prowse is at the University of Oxford.

For further information: contact Romesh Vaitilingam on 07768-661095 (email: romesh@compuserve.com).

Find more papers by Victoria Prowse at EconPapers and search for more Internet resources on the issues of women and employment and the labour force and market at Intute: Economics.

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Academics are underpaid and overworked compared with other graduate professions and this is likely to have consequences for the quality of UK degrees. That is the conclusion of new research by James Walker and colleagues, presented to the Royal Economic Society’s 2007 annual conference at the University of Warwick.

The study finds that:

• Not only do academics work longer hours than the average graduate, but they also earn around 3% less.
• In terms of their earnings, academics compare particularly poorly with accountants, those in the legal professions, consultants, engineers, physicians, pharmacists and dental practitioners (across both the public and private sectors).
• On average, academics earn approximately 17% less than other similarly qualified individuals in the accountancy profession, 23% less than lawyers, 24% less than doctors and 49% less than dentists.
• Only two groups of workers do worse than academics: teachers in further education and, to a lesser extent, secondary school teachers.
• Academic pay is an important policy issue because if the relative pay of academics falls, it is likely to lead to lower quality individuals entering and remaining in the profession, as well as a brain drain to countries that reward academics more highly.
• These trends are in turn likely to have a knock-on effect on the quality of UK higher education.

Higher education is of crucial importance to the UK economy. The sector is estimated to be worth £45 billion. It is also becoming a global business with current export earnings of about £3.6 billion. The sector is playing a key role in achieving the government aspiration for a high skill strategy to transform the UK into a knowledge economy, as reflected in the target of 50% participation in higher education by the end of the decade. Maintaining the quality of the sector is vital for preserving its high international status and for producing high quality skilled labour for the economy.

Economic theory would suggest that if academic pay falls, relative to other similar professions, the calibre of individuals entering and remaining in the profession is likely to fall. But robust analysis of relative academic pay in the UK has been limited.

James Walker and his colleagues have analysed the size of the gap in hourly earnings between academics and graduates in a range of other comparable occupations. The study identifies the gap in hourly earnings between different occupations after taking account of a range of other differences in the characteristics of individuals who go into different professions, such as their gender, ethnicity and of course their education level.

The study concludes that after taking account of these other factors, academics still earn somewhat lower earnings than most public sector and private sector graduates and that they do particularly poorly compared with a range of comparable professions.

Of the other graduate professions considered by the authors, dentists are the best paid followed by doctors, lawyers, accountants, legal professionals, accountants, pharmacists and pharmacologists, consultants and engineers; all of whom earn considerably more then the average graduate. Indeed, of the ten groups examined, it is only the three education professions  academics, teachers in further education and secondary school teachers who are paid less then the average UK graduate.

Not only are academics relatively lowly paid compared with other professions but they also work longer hours then other graduates. While the average graduate worked around 44 hours per week in 2004, academics worked 47 hours per week. Indeed, with the exception of doctors who worked around 51 hours per week in 2004, academics work longer hours than the other ten professions.

The study was not able to consider the non-pecuniary benefits from working as an academic, such as the ability to do flexible working hours or have greater intrinsic interest in the work. Further research is needed to determine whether these non-pecuniary benefits are likely to compensate for lower wages.

The results from the study suggest that policy-makers should be concerned about the relative low pay of academics. As pay in the higher education sector is largely not determined by a free labour market, there is a risk that relative wages for academics may decline further and thereby reduce the quality of the workforce in higher education.

Notes for editors: Higher Education Academic Salaries in the UK by James Walker, Anna Vignoles and Mark Collins was presented at the Royal Economic Society’s 2007 annual conference at the University of Warwick, 11-13 April.

James Walker is at the University of Reading Business School; Anna Vignoles is at the Institute of Education.

For further information: contact Romesh Vaitilingam on 07768-661095 (email: romesh@compuserve.com).

Find more Internet resources on the issue of the economics of education at Intute: Social Sciences.