Improving skills among the workforce is seen as fundamental to achieving a more competitive economy and maintaining productivity, with a world-class skills base considered a key driver of competitive advantage (BIS, 2010). This report uses data from the British Household Panel Survey to investigate how projected improvements in skills levels in the UK economy between now and 2020 will aﬀect rates of poverty and income inequality.
- models the impact of skills on the probability of employment and on earnings derived from employment for working-age people;
- uses estimates from these models to predict the distribution of earnings, and simulate the distribution of net household incomes, likely to arise from the distribution of skills by 2020; and
- predicts the levels of poverty and income inequality likely to be engendered by the diﬀerent distribution of skills.