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The Changing Structure of Male Earnings in Britain

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  • John Schmitt

Abstract

The paper uses data from the annual British General household Survey to examine changes in the structure of weekly earnings for full-time male employees aged 16 to 64 during the period 1974-1988. The principal findings are: (1) earnings inequality fell slightly in the second half of the 1970s only to grow sharply during the 1980s; (2) rising financial returns to education and labor market experience in the 1980s account for between one-third and one-half of the growth in earnings inequality during the 1980s; (3) the earnings if low-skilled workers increased by over 15 percent in real terms between 1974 and 1988. Rising returns to skills in the face of large increase in the supply of skilled labor suggest a substantial shift in labor demand in favor of skilled workers. Changes in British labor market institutions, particularly the decline in trade unions density may also help to explain part of the rise in inequality during the 1980s.

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Bibliographic Info

Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0122.

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Date of creation: Mar 1993
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Handle: RePEc:cep:cepdps:dp0122

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Web page: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP

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  1. Bluestone, Barry, 1990. "The Impact of Schooling and Industrial Restructuring on Recent Trends in Wage Inequality in the United States," American Economic Review, American Economic Association, American Economic Association, vol. 80(2), pages 303-07, May.
  2. Lawrence F. Katz & Gary W. Loveman & David G. Blanchflower, 1993. "A Comparison of Changes in the Structure of Wages," NBER Working Papers 4297, National Bureau of Economic Research, Inc.
  3. Juhn, Chinhui & Murphy, Kevin M & Pierce, Brooks, 1993. "Wage Inequality and the Rise in Returns to Skill," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 101(3), pages 410-42, June.
  4. Alan B. Krueger, 1991. "How Computers Have Changed the Wage Structure: Evidence From Microdata, 1984-1989," NBER Working Papers 3858, National Bureau of Economic Research, Inc.
  5. Psacharopoulos, George & Layard, Richard, 1979. "Human Capital and Earnings: British Evidence and a Critique," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 46(3), pages 485-503, July.
  6. Jacob Mincer, 1991. "Human Capital, Technology, and the Wage Structure: What Do Time Series Show?," NBER Working Papers 3581, National Bureau of Economic Research, Inc.
  7. George J. Borjas & Richard B. Freeman & Lawrence F. Katz, 1991. "On the Labor Market Effects of Immigration and Trade," NBER Working Papers 3761, National Bureau of Economic Research, Inc.
  8. Katz, L.F. & Murphy, K.M., 1991. "Changes in Relative Wages, 1963-1987: Supply and Demand Factors," Harvard Institute of Economic Research Working Papers, Harvard - Institute of Economic Research 1580, Harvard - Institute of Economic Research.
  9. Layard, Richard & Nickell, Stephen & Jackman, Richard, 2005. "Unemployment: Macroeconomic Performance and the Labour Market," OUP Catalogue, Oxford University Press, Oxford University Press, number 9780199279173, October.
  10. Blackburn-Mckinley, L. & Bloom, D.E. & Freeman, R.B., 1989. "The Declining Economic Position Of Less-Skilled American Males," Discussion Papers, Columbia University, Department of Economics 1989_41, Columbia University, Department of Economics.
  11. Katz, Lawrence F. & Revenga, Ana L., 1989. "Changes in the structure of wages: The United States vs Japan," Journal of the Japanese and International Economies, Elsevier, vol. 3(4), pages 522-553, December.
  12. Steve J. Davis & John Haltiwanger, 1991. "Wage Dispersion Between and Within U.S. Manufacturing Plants, 1963-1986," NBER Working Papers 3722, National Bureau of Economic Research, Inc.
  13. Nickell, Stephen, 1979. "Education and Lifetime Patterns of Unemployment," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 87(5), pages S117-31, October.
  14. McKinley L. Blackburn & David Neumark, 1991. "Omitted-Ability Bias and the Increase in the Return to Schooling," NBER Working Papers 3693, National Bureau of Economic Research, Inc.
  15. Haskel, Jonathan & Martin, Christopher, 1993. "Do Skill Shortages Reduce Productivity? Theory and Evidence from the United Kingdom," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 103(417), pages 386-94, March.
  16. Ashenfelter, Orley & Layard, Richard, 1983. "Incomes Policy and Wage Differentials," Economica, London School of Economics and Political Science, London School of Economics and Political Science, vol. 50(198), pages 127-43, May.
  17. Bluestone, Barry & Harrison, Bennett, 1988. "The Growth of Low-Wage Employment: 1963-86," American Economic Review, American Economic Association, American Economic Association, vol. 78(2), pages 124-28, May.
  18. Bell, David & Rimmer, Russell & Rimmer, Sheila, 1994. "Earnings Inequality in Great Britain 1975-90: The Role of Age," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 40(3), pages 287-302, September.
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Citations

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Cited by:
  1. López Bóo, Florencia, 2010. "Returns to Education and Macroeconomic Shocks: Evidence from Argentina," IZA Discussion Papers 4753, Institute for the Study of Labor (IZA).
  2. Robin Naylor, 1995. "Unions in Decline?," Nordic Journal of Political Economy, Nordic Journal of Political Economy, Nordic Journal of Political Economy, vol. 22, pages 127-142.
  3. Alan Manning, 1998. "Movin on up: interpreting the earnings experience profile," LSE Research Online Documents on Economics, London School of Economics and Political Science, LSE Library 20294, London School of Economics and Political Science, LSE Library.
  4. Barrett, Alan & FitzGerald, John & Nolan, Brian, 2000. "Earnings Inequality, Returns to Education and Immigration into Ireland," IZA Discussion Papers 167, Institute for the Study of Labor (IZA).
  5. Engelmann, Sabine, 2012. "International trade, technical change and wage inequality in the U.K. economy," IAB Discussion Paper 201208, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  6. Richard Blundell & Lorraine Dearden & Barbara Sianesi, 2003. "Evaluating the impact of education on earnings in the UK: Models, methods and results from the NCDS," IFS Working Papers, Institute for Fiscal Studies W03/20, Institute for Fiscal Studies.
  7. David Metcalf, 1993. "Transformation of British Industrial Relations? Institutions, Conduct and Outcomes 1980-1990," CEP Discussion Papers, Centre for Economic Performance, LSE dp0151, Centre for Economic Performance, LSE.

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