The local low skills equilibrium: Moving from concept to policy utility

Abstract

It is more than three decades since the publication of Finegold and Soskice’s (1988) influential article ‘The failure of training in Britain: Analysis and prescription’. This widely cited publication popularised the notion of the low skills equilibrium (LSEq). The LSEq described how at the national level, weakness in the education and training system, aligned with the nature of political-economic institutions, acted as both a cause, but was also a consequence, of weak economic performance. In the period since, the LSEq thesis has been developed and deployed in a range of ways, including with an increasing emphasis on localised low skills equilibria and their relationship to spatially uneven development. However, there are a number of unresolved concerns with the use of the LSEq to describe regional, urban and local outcomes. These include the limits to aggregate analysis, which obscures detailed assessment of causal mechanisms; weaknesses in approaches to measurement to test the LSEq; and insufficient attention to change over time. This article makes three central contributions. First, it assesses the important conceptual issues associated with the development of the LSEq, its application to regional and local economies and the related measurement issues. Secondly, the article outlines a set of research gaps and an agenda to help identify the ways these issues might be resolved. Thirdly, the article addresses the question of policy, and the extent to which a better understanding of the problem might facilitate interventions aimed at unlocking the local LSEq.