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Forecasting the supply of construction skills in the UK

Agapiou, Andrew and Price, Andrew and McCaffer, Ron (1995) Forecasting the supply of construction skills in the UK. Construction Management and Economics, 13 (4). pp. 353-364. ISSN 0144-6193

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An aggregate supply model is presented for craft trainee entrants to the UK construction sector using annual data for the period 1976-1990. The theoretical framework used to formulate the equation was based on the human capital approach to analysing labour supply, as applied to new entrants to the engineering sector. In particular, the paper tests the hypothesis that the proportion of school-leavers choosing to train as construction operatives depends on the real craft wage and the long-term prospects of the construction industry. Co-integration was used to produce a long-run relationship between intakes, real wages, output and other variables. The supply equation was then reduced to a more parsimonious representation. The final restricted form of the model was tested against various diagnostic statistical criteria. The real craft wage and output were found to be the main factors determining the choice between training as a construction craft operative and any other job. In addition, demographic trends and socioenvironmental factors such as the image of the industry were found to have a strong effect on the supply of new entrants.