Title: Centre for the Microeconomic Analysis of Public Policy (CPP)
Funder: Economic and Social Research Council

Abstract: Designing and implementing good public policy is essential if the UK or any other country is to succeed in the global economy. Our research is designed to promote good policy, by increasing our understanding of the way in which changes in policy and the economy affect individuals, families, firms and governments. It is all too easy for governments to design a policy that looks good in isolation, but which has unintended consequences when the links with other policy areas are taken into account. So while we summarise our plans in four main strands here, the links between them are as important as the research in each category: WAGES, SKILLS AND EDUCATION People's productive skills develop over their lives, helping determine living standards and economic performance. Skills are particularly important when globalisation intensifies competition and increases international mobility among both skilled and unskilled workers. We will examine the investments that families and the state make in young people's development and the relationship between skills and earnings. For example, we will ask how school quality and siblings affect the time and money parents invest in their children and the resulting educational outcomes. And we will ask how wages are influenced by job changes, regulations and choice of workplace. LABOUR SUPPLY, HEALTH AND RETIREMENT Success in the global economy requires an environment that encourages people to undertake the right amount of paid work. We will analyse what determines people's work decision over their lives, looking at the importance of tax and benefit incentives, health conditions and pension arrangements. We will ask what policies are best adapted to changes in demands for different skills and the composition of families. For example, we will examine how people's mental and physical health affects their decisions to move into and out of work. And we will investigate the appropriate mix of benefits and tax credits in the support of low-income families. SAVING, HOUSING AND CONSUMER BEHAVIOUR Understanding how people consume and save is vital for many policy decisions, especially given current trends in global population structure and financial markets. We will look at new measures of preferences, beliefs, information and expectations to understand consumption and saving better. We will draw lessons for savings taxation and pension reform and explore the links between housing and saving. For example, we will ask how people's savings decisions vary with age, wealth and skills. We will ask how prices and nutritional information influence the food people buy. And we will examine why the housing market is as volatile as it is. FIRMS AND CORPORATE BEHAVIOUR If policy is to promote wealth creation and economic success, we need to understand better how firms behave, especially now they increasingly span national borders. We will examine how firms decide whether to enter an industry, how they decide where to locate their research activities (and whether this matters), how they set prices and how they manage their people, investment and intellectual property. For example, we will examine how taxes influence the pay-off to risky investments and people's choices between taking a job, self-employment and starting a business. We will ask what determines the products retailers offer and the prices consumers pay.


Research activity codes: 8.2 HEALTH AND WELFARE ECONOMICS;8.3 POLICY, ETHICS AND RESEARCH GOVERNANCE
Health categories: GENERIC HEALTH RELEVANCE