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Public Sector Employment, Wage Inequality and the Gender Pay Ratio in the UK

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Author Info
Damian Grimshaw
Abstract

This paper assesses the relative contributions of the different systems of pay determination in the private sector and the public sector toward the changing level of wage inequality and the gender pay ratio in the UK. The greater centralisation of pay arrangements in the public sector compared with the private sector in the UK suggests that public sector employment may have acted to offset the widening wage inequality seen in recent years, as well as making an important contribution to the increase in women's relative average earnings compared to men. This issue is addressed by drawing on unpublished occupational hourly earnings data from the New Earnings Survey and applying decomposition of the Theil index of wage inequality to analyse both static and dynamic trends. The change in wage inequality for the period 1986 to 1995 primarily reflected the change in wage dispersion within the private sector, and the narrowing of the gender pay gap among the public sector workforce was an important factor in explaining the overall improvement in women's relative earnings. The paper argues that the relatively centralised pay arrangements in the public sector, compared with the private sector, played an important role in slowing the increase in wage inequality and narrowing the gender pay gap. As such, future policies to decentralise pay determination in the UK public sector may exacerbate the increasing level of wage inequality and reverse women's recent relative pay improvements.

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Article provided by Taylor and Francis Journals in its journal International Review of Applied Economics.

Volume (Year): 14 (2000)
Issue (Month): 4 (October)
Pages: 427-448
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Handle: RePEc:taf:irapec:v:14:y:2000:i:4:p:427-448

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  1. William J. Carrington & Kristin McCue & Brooks Pierce, 1996. "Black/white wage convergence: The role of public sector wages and employment," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 49(3), pages 456-471, April.
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  3. Blau, Francine D & Kahn, Lawrence M, 1996. "International Differences in Male Wage Inequality: Institutions versus Market Forces," Journal of Political Economy, University of Chicago Press, vol. 104(4), pages 791-836, August. [Downloadable!] (restricted)
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  4. Lawrence F. Katz & Kevin M. Murphy, 1991. "Changes in Relative Wages, 1963-1987: Supply and Demand Factors," NBER Working Papers 3927, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  5. Fortin, Nicole M & Lemieux, Thomas, 1997. "Institutional Changes and Rising Wage Inequality: Is There a Linkage?," Journal of Economic Perspectives, American Economic Association, vol. 11(2), pages 75-96, Spring. [Downloadable!] (restricted)
  6. Machin, Stephen, 1996. "Wage Inequality in the UK," Oxford Review of Economic Policy, Oxford University Press, vol. 12(1), pages 47-64, Spring.
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  8. Michael P. Kidd & Michael Shannon, 1996. "The gender wage gap: A comparison of Australia and Canada," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 49(4), pages 729-746, July.
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  9. Fishlow, Albert, 1972. "Brazilian Size Distribution of Income," American Economic Review, American Economic Association, vol. 62(2), pages 391-402, May. [Downloadable!] (restricted)
  10. Stephen Machin & Alan Manning, 1994. "The effects of minimum wages on wage dispersion and employment: Evidence from the U.K. Wages Councils," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 47(2), pages 319-329, January.
  11. Freeman, Richard B, 1995. "Are Your Wages Set in Beijing?," Journal of Economic Perspectives, American Economic Association, vol. 9(3), pages 15-32, Summer. [Downloadable!] (restricted)
  12. Blau, Francine D & Kahn, Lawrence M, 1992. "The Gender Earnings Gap: Learning from International Comparisons," American Economic Review, American Economic Association, vol. 82(2), pages 533-38, May. [Downloadable!] (restricted)
  13. Stephen Machin, 1995. "Changes in the Relative Demand for Skills in the UK Labour Market," CEP Discussion Papers dp0221, Centre for Economic Performance, LSE.
  14. Grimshaw, Damian & Rubery, Jill, 1998. "Integrating the Internal and External Labour Markets," Cambridge Journal of Economics, Oxford University Press, vol. 22(2), pages 199-220, March.
  15. Blau, Francine D & Kahn, Lawrence M, 1994. "Rising Wage Inequality and the U.S. Gender Gap," American Economic Review, American Economic Association, vol. 84(2), pages 23-28, May. [Downloadable!] (restricted)
  16. Borjas, G.J. & Freeman, R.B. & Katz, L.F., 1991. "On The Labor Market Effects Of Immigration And Trade," Harvard Institute of Economic Research Working Papers 1556, Harvard - Institute of Economic Research.
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  17. Jeffrey D. Sachs & Howard J. Shatz, 1994. "Trade and Jobs in Manufacturing," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 25(1994-1), pages 1-84. [Downloadable!]
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