Accounting for Changes in Income Inequality: Decomposition Analyses for the UK, 1978-2008

Oxford Bulletin of Economics & Statistics, doi: 10.1111/obes.12113

49 Pages Posted: 2 Sep 2015

See all articles by Mike Brewer

Mike Brewer

Institute for Fiscal Studies (IFS)

Liam Wren-Lewis

Paris School of Economics (PSE)

Date Written: September 1, 2015

Abstract

We analyse income inequality in the UK from 1978 to 2009 in order to understand why income inequality rose very rapidly from 1978 to 1991 but then remained broadly unchanged. We find that inequality in earnings among employees has risen fairly steadily since 1978, but other factors that caused income inequality to rise before 1991 have since gone into reverse. Inequality in investment and pension income has fallen since 1991, as has inequality between those with and without employment. Furthermore, certain household types – notably the elderly and those with young children – which had relatively low incomes in the period to 1991 have seen their incomes converge with others.

JEL Classification: H23, H53, I32

Suggested Citation

Brewer, Mike and Wren-Lewis, Liam, Accounting for Changes in Income Inequality: Decomposition Analyses for the UK, 1978-2008 (September 1, 2015). Oxford Bulletin of Economics & Statistics, doi: 10.1111/obes.12113. Available at SSRN: https://ssrn.com/abstract=2654279

Mike Brewer

Institute for Fiscal Studies (IFS) ( email )

7 Ridgmount Street
London, WC1E 7AE
United Kingdom

Liam Wren-Lewis (Contact Author)

Paris School of Economics (PSE) ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

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