Wage Inequality in the United Kingdom, 1975-99

31 Pages Posted: 5 Sep 2001  

Eswar S. Prasad

Cornell University - Dyson School of Applied Economics and Management; Cornell University - Department of Economics; Brookings Institution; NBER; IZA Institute of Labor Economics

Date Written: December 15, 2001

Abstract

This paper uses micro data from the New Earnings Survey to document that cross-sectional wage inequality in the U.K., which rose sharply in the 1980s and continued to rise moderately through the mid-1990s, has remained essentially unchanged in the latter half of the 1990s. As in the U.S., changes in within-group inequality are shown to account for a substantial fraction of the rise in wage dispersion that has occurred over the last 25 years. However, shifts in the structure of employment - including changes in the occupational and industrial composition of aggregate employment - are also shown to have had important effects on the evolution of wage inequality. In addition, there has been a significant convergence of the wage distributions for men and women; this has had a stabilizing effect on the overall wage distribution.

Keywords: Cross-sectional wage inequality, micro survey data, between- and within-group inequality, composition effects

JEL Classification: J31, E24

Suggested Citation

Prasad, Eswar S., Wage Inequality in the United Kingdom, 1975-99 (December 15, 2001). IMF Working Paper No. 02/42. Available at SSRN: https://ssrn.com/abstract=282058 or http://dx.doi.org/10.2139/ssrn.282058

Eswar S. Prasad (Contact Author)

Cornell University - Dyson School of Applied Economics and Management ( email )

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HOME PAGE: http://prasad.aem.cornell.edu

Cornell University - Department of Economics ( email )

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Brookings Institution ( email )

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IZA Institute of Labor Economics

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