Work and Well-being:

Research Themes

Health and Healthcare

All Western societies spend a large and growing share of their GDP on health care. In the UK, the rate of increase of health spending is among the fastest of any advanced industrial country. The health care sector must be organised appropriately and have suitable policies in place if it is to deliver the types of health care that society desires within an affordable budget. In addition, society is increasingly seeking answers to questions about the interactions between behaviours that affect health and economic circumstances. Current examples include the concerns with obesity, alcohol and substance abuse.

The need to understand these developments has led to a dramatic growth in the analysis of panel datasets which track cohorts of people through time and linked administrative datasets which, for example, allow the matching of characteristics, such as the skills, and earnings of health service workers with the health status of the patients they have treated. The analysis of such datasets requires the application of the advanced analytic and econometric skills originally developed by labour economists. Researchers are addressing fundamental questions such as:

  • Given the importance of investments in health care, how can the output and productivity of the health care sector best be measured?
  • How can the health care sector obtain, and motivate, the workforce necessary to deliver the required health services, and how can it design wage contracts to motivate the delivery of the required human resources input?
  • Given that health care is delivered by organisations that differ from the standard concept of a profit-maximising firm, how is the behaviour of health care providers influenced by the payments that they receive?
  • How can social care be delivered cost-effectively in an ageing society?
  • How should we design programmes to motivate individuals to engage in health improving behaviours to address issues of obesity, alcohol and substance abuse?
  • In the presence of services that are delivered either free of charge or heavily subsidised to recipients, how should health care interventions be valued?

Work and Rewards

Economic analysis has traditionally focused on how wages and the structures of wage contracts affect individuals’ decisions over when to work, where to work, and how hard to work. An important current theme is the need to achieve flexible and adaptive labour markets in the face of changes in technology, international competitiveness and unforeseen shocks. The study of wages and wage contracts at the microeconomic level is key to understanding labour market flexibility and a focus of current policy in Europe and North America. Scottish labour economists have contributed to our understanding of these issues by analysing:

  • From both labour demand and supply perspectives, remuneration schemes which link labour costs with prevailing business conditions.
  • The contracts that prevail in national and local labour markets and their consequences for employment and unemployment policies.
  • The flexibility of public sector pay structures and conditions of employment and their responsiveness to the very different local conditions in geographically dispersed labour markets.
  • The relationships between wage flexibility and the propensity of individuals to move between jobs within the same firm, and between firms in the same and different regions.
  • How should we design programmes to motivate individuals to engage in health improving behaviours to address issues of obesity, alcohol and substance abuse?
  • In the presence of services that are delivered either free of charge or heavily subsidised to recipients, how should health care interventions be valued?

Labour economists have researched these topics by developing new or adapting existing theories, which typically involve contracts and incentives, and interrogating the available evidence to test the theory. Assembling the evidence and interrogating the data involves the same micro-econometric techniques that were identified in the Health and Health Care theme.

The two themes of Work and Well-being have a common interest in both incentives and contracts on the one hand and on methods for analysing data on the other. The Behaviour, Incentives and Contracts Programme (BIC), is primarily concerned with theoretical developments in incentive and contract theory, while Work and Well-being is primarily concerned with empirical tests of these theories. The development of SIRE will result in greater interaction between the economists in the Work and Well-being programme and the contract and incentives theorists in Edinburgh. BIC will explore the theoretical foundations and provide theoretical underpinning for aspects of work within both of the themes in Work and Well-being.