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The Equal Pay Act as an Experiment to Test Theories of the Labour Market

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  • Manning, Alan

Abstract

The UK Equal Pay Act of 1970 resulted in a large rise in the relative earnings of women in the early 1970s. As this change (unlike most wage changes) was largely exogenous to employers, one can think of this episode as an experiment for testing different theories of the labour market. Hence, study of the effects of the Equal Pay Act should be given considerable weight and is likely to have wider implications about the operation of labour markets. Most models of the labour market used by economists assume that employment is demand-determined at least after a large positive shock to the wage. These models would predict that female relative employment should have fallen after the introduction of the Equal Pay Act. Yet, it is hard to find evidence of this. This paper argues that female relative employment did not fall because the female labour market is, in part, monopsonistic. Copyright 1996 by The London School of Economics and Political Science.

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Article provided by London School of Economics and Political Science in its journal Economica.

Volume (Year): 63 (1996)
Issue (Month): 250 (May)
Pages: 191-212

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Handle: RePEc:bla:econom:v:63:y:1996:i:250:p:191-212

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Cited by:
  1. G. Sulis, 2007. "What Can Monopsony Explain of the Gender Wage Differential in Italy?," Working Paper CRENoS 200713, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
  2. Weber, Andrea & Zulehner, Christine, 2009. "Competition and Gender Prejudice: Are Discriminatory Employers Doomed to Fail?," IZA Discussion Papers 4526, Institute for the Study of Labor (IZA).
  3. Barth, Erling & Dale-Olsen, Harald, 2009. "Monopsonistic discrimination, worker turnover, and the gender wage gap," Labour Economics, Elsevier, vol. 16(5), pages 589-597, October.
  4. Dessing, Maryke, 2004. "Implications for minimum-wage policies of an S-shaped labor-supply curve," Journal of Economic Behavior & Organization, Elsevier, vol. 53(4), pages 543-568, April.
  5. Gosling, Amanda, 2003. "The Changing Distribution of Male and Female Wages, 1978-2000: Can the Simple Skills Story be Rejected?," CEPR Discussion Papers 4045, C.E.P.R. Discussion Papers.

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