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This paper provides a new analysis of the main stylised facts underlying the evolution of labour supply at the extensive and intensive margins in three countries: the United States, the United Kingdom and France. We propose a definition of the extensive and intensive margins corresponding respectively to the employment rate and to hours when employed. This definition is robust to the choice of the reference period and we develop a new statistical decomposition that provides bounds on changes at these margins. We focus on longer-run labour supply changes over the period 1977 to 2007 and abstract from the shorter-run impact of recessions. Examining secular changes over this period, we show that both margins matter in explaining changes in total hours. We then provide a detailed analysis across countries and across time by demographic type. Given the large systematic differences we uncover in the importance of these margins by age and gender, it is unlikely that a single explanation will suffice to account for the macroeconomic evolutions in the three countries. Policy points• Total hours of work increased strongly in the US, were stable in the UK and fell back in France over the three decades up to 2007. This appears to have been driven by increasing participation and stable hours in the US, increasing participation and declining hours in the UK, and falling participation and hours in France. These changes highlight the potential importance of incentives in the tax and welfare system in explaining differences in hours worked and employment across countries.• At older ages, men in the UK and the US exhibit very similar employment rates up to 65, when the British experience a larger drop than the Americans, whereas French male employment rates diverge from age 55. Incentives in pension and social security provisions are likely to play a central role in explaining differences across countries.• Among 16-to 29-year-olds, France stands out with much higher nonemployment rates than both the US and the UK. Much of the difference arises from the possibility of combining education and training with work. Young French people who are studying are generally not working, whereas young Britons and Americans are much more likely to be both working and in education. The balance between incentives to work and study is a key area for policy analysis.• Our account of the secular changes in employment and hours in the UK, France and the US over the three decades up to 2007 shows some clear trends and points to some possible explanations, but it also raises a number of puzzles. The resolution of these puzzles calls for a detailed analysis of effective incentives in the tax and benefit system, how they have changed over time, and how individuals and families have responded. Given the large heterogeneity by age and sex that we document, it is unlikely that a single explanation will account for these evolutions.

In this paper we propose a systematic way of examining the importance of the extensive and the intensive margins of labor supply in order to explain the overall movements in total hours of work over time. We show how informative bounds can be developed on each of these margins. We apply this analysis to the evolution of hours of work in the US, the UK, and France and show that both the extensive and intensive margins matter in explaining changes in total hours.

This Briefing Note describes state pension provision in the United Kingdom from the inception of the basic state pension in 1948, following the Beveridge Report, to Pensions Act 2007 and the plans of the Conservative/Liberal Democrat coalition government. The main objective is to provide a comprehensive description of the rules that currently determine pension benefits as well as those that have been in place in the past. However, we also provide a brief historical overview of the dilemmas facing policymakers when contemplating pension reforms and a summary of the most recent reforms. The history of the UK pension system is the story of a mainly non-contributory system, periodically tempted by the higher replacement rate of social insurance schemes, but always frightened once the costs become apparent. Recent reforms have tilted the system further in the direction of a universal flat-rate benefit, abandoning any social insurance design. This confirms that the main objective of the UK state pension system is to reduce poverty at old age. These flat-rate pensions will also reduce the reliance of the system on means-tested benefits, somewhat reinforcing the Beveridgean design of the system. Given these clarifications, it is unfortunate that the latest reforms have still sought to maintain much of the complex structure of the pre-existing system instead of reforming and rationalising it. However, once issues of transition have been dealt with, there may yet be scope for simplifying the presentation of the rules. * This paper was funded by the ESRC Centre for the Microeconomic Analysis of Public Policy at the Institute for Fiscal Studies (RES-544-28-5001). The authors would like to thank Carl Emmerson for useful comments on an earlier draft of this Briefing Note and Judith Payne for copy-editing. All remaining errors are the responsibility of the authors.