Council of Economic Advisers: annual report 2015-2016

Glossary

Active Labour Market Policies - government programmes that intervene in the labour market to help the unemployed find work, such as training schemes, employment subsidies and public employment services.

Capital Stock - Refers to the level of assets with productive capacity in an economy.

Conditionality - The use of conditions attached to the provision of benefits.

Employment Level - The number of people in an economy who are in work.

Employment Rate - the proportion of the working-age population who are in work.

Gross Domestic Product ( GDP) - The value of goods and services produced by all sectors of the economy. It is equal to Gross Value Added at basic prices plus taxes (less subsidies) on products. Alternatively, it is equal to the sum of total final domestic consumption expenditures less imports of goods and services.

Gross Value Added ( GVA) - The contribution to the economy of each individual producer, industry or sector. It is a measure of GDP in basic prices.

Gini Coefficient - A measure of income equality that measures the extent to which the distribution of income among individuals or households within an economy deviates from a perfectly equal distribution. A Gini index of zero represents perfect equality, and an index of 1 represents perfect inequality.

Gender Pay Gap - A measure of the relative difference in earnings of women and men within the economy as a whole. In the UK it is measured as the difference in full-time median earnings, excluding overtime, between men and women.

Inactivity Rate - the proportion of the working-age population who are not in work and are not actively seeking a job.

Innovation Active - Refers to whether an enterprise is engaging in innovative activities, such as: introducing new or improved products or processes; engaging in innovation projects; and improving or introducing forms of organisation, business structures or practices and marketing concepts or strategies.

Knowledge-Based Capital - Refers to a range of intangible assets including computerised information, intellectual property, and economic competencies such as brand equity and people networks.

Living Wage - A voluntary hourly rate of pay calculated according to the basic cost of living in the UK. The current UK living wage is £8.25 an hour (outside London).

Mission-Oriented Policies - Refers to systemic public policies that draw on knowledge from particular areas or fields to attain specific goals.

National Performance Framework - The Scottish Government's framework for measuring progress towards its purpose, including targets, indicators and outcomes across a range of economic, health, social and environmental dimensions.

Natural Capital - The stock of natural assets (such as geology, soil, air, water and species) and the services derived from those assets (such as provisioning of food and water).

Palma Ratio - A measure of income inequality that measures the ratio of income earned by the top 10% of the income distribution to the income earned by the bottom 40% of the income distribution.

Patient Capital - Refers to capital that is invested over the longer term without the expectation of an immediate return.

Positive Destinations - Refers to whether a school leaver is in further learning, training or work approximately nine months after leaving school.

Productivity - A measure of how efficiently an economy can convert its inputs in the production process ( e.g. labour and capital) into outputs. It is typically measured using labour productivity, defined as output per hour worked or output per job.

Purchasing Power Parities ( PPPs) - Rates of currency conversion that equalise the purchasing power of different currencies by eliminating the differences in price levels between countries. PPPs can be used to convert the GDP level of countries, expressed in national currencies, into a common currency to allow international comparisons to be made.

Real terms change - Changes in a variable measured in constant price terms, excluding the effect of inflation.

Relative poverty - Refers to individuals living in private households with an equivalised income of less than 60% of the UK median before housing costs.

Scottish Index of Multiple Deprivation ( SIMD) - A Scottish Government tool used to identify small area concentrations of multiple deprivation across Scotland. The SIMD ranks small areas (datazones) from most deprived to least deprived based on measures of employment, income, health, education, access to services, crime, and housing.

Skill-biased technological change - A shift in production technology that leads to increased relative demand for skilled labour over unskilled labour, as skilled labour becomes relatively more productive.

Total Factor Productivity ( TFP) - Reflects the overall efficiency with which labour and capital inputs are used together in the production process. TFP is measured as the residual component of GDP growth that cannot be explained by changes in production inputs.

Unemployment Rate - The proportion of the population who are not in work and are actively seeking a job.