Labour Market Reforms and Changes in Wage Inequality in the United Kingdom and the United States

56 Pages Posted: 13 Aug 2001 Last revised: 22 Oct 2010

See all articles by Amanda Gosling

Amanda Gosling

University of Essex - Department of Economics; Institute for Fiscal Studies (IFS); Centre for Economic Policy Research (CEPR)

Thomas Lemieux

University of British Columbia (UBC) - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: August 2001

Abstract

This paper compares trends in male and female hourly wage inequality in the United Kingdom and the United States between 1979 and 1998. Our main finding is that the extent and pattern of wage inequality became increasingly similar in the two countries during this period. We attribute this convergence to 'U.S. style' reforms in the U.K. labour market. In particular, we argue that the much steeper decline in unionisation in the United Kingdom explains why inequality increased faster than in the United States. For women, we conclude that the fall and subsequent recovery in the real value of the U.S. minimum wage explains why wage inequality increased faster in the United States than in the United Kingdom during the 1980s, while the opposite happened during the 1990s. Interestingly, the introduction of the National Minimum Wage in the U.K. in 1999 also contributed to the convergence in labour market institutions and wage inequality between the two countries.

Suggested Citation

Gosling, Amanda and Lemieux, Thomas, Labour Market Reforms and Changes in Wage Inequality in the United Kingdom and the United States (August 2001). NBER Working Paper No. w8413, Available at SSRN: https://ssrn.com/abstract=279700

Amanda Gosling

University of Essex - Department of Economics ( email )

Wivenhoe Park
Colchester CO4 3SQ
United Kingdom
+44 12 0687 2768 (Phone)
+44 12 0687 2724 (Fax)

Institute for Fiscal Studies (IFS)

7 Ridgmount Street
London, WC1E 7AE
United Kingdom

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Thomas Lemieux (Contact Author)

University of British Columbia (UBC) - Department of Economics ( email )

997-1873 East Mall
Vancouver, BC V6T 1Z1
Canada

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States
514-343-2395 (Phone)
514-343-5831 (Fax)

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
46
Abstract Views
944
PlumX Metrics