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Understanding Productivity and Prosperity: Regional skills mismatches and inclusive growth for the West Midlands

Authors: Chloe Billing*, City-REDI, Simon Collinson, University of Birmingham , Anne Green, University of Birmingham, Magda Cepda Zorrilla , University of Birmingham, Fengjie Pan, University of Birmingham
Topics: Economic Geography, Business Geography
Keywords: Productivity, Skills mismatch, Constraints, Inclusive growth, West Midlands
Session Type: Paper
Presentation File: No File Uploaded

The UK lags behind most OECD countries in terms of average productivity and productivity growth rates. Particular regions of the UK are behind this average because of a combination of factors, including shortage of skills, local industry structures, levels of investment and management practices. The central aim of the paper is to identify local factors that underlie and explain regional differences in productivity, with a focus on mismatches between the supply of and demand for specific skills. It will theoretically explore how skills and regional labour markets act as productivity constraints at the firm level, across different functions and different industry sectors. We will also consider key trade-offs between productivity improvement and inclusive growth goals, as there is a clear relationship between employment growth and lower productivity (Lee, 2018; Lupton et al., 2016; Green et al., 2017). These research priorities are shaped by prior research which identifies: lags in productivity performance at the national and regional levels (ONS, 2017); the importance of firm-level management as an explanatory factor (Bloom et al., 2016); and the significance of internal skills gaps and external skills shortages (Green, 2017; Vivian et al., 2016; Asnar et al., 2015). The paper is the outcome of the first-phase of a 3-year project on productivity and inclusive growth in the West Midlands region. It provides a critical foundation for our empirical research, which will provide a ‘deep dive’ in four sectors (BPS, advanced manufacturing, retail and hospitality) to better-explain the constraints on productivity improvements at the local level.

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