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

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  • Alan Manning

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. The 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 employment did not fall because the female labour market is, in part monopsonistic.

Suggested Citation

  • Alan Manning, 1993. "The Equal Pay Act as an Experiment to Test Theories of the Labour Market," CEP Discussion Papers dp0153, Centre for Economic Performance, LSE.
    • Handle: RePEc:cep:cepdps:dp0153
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    Cited by:

    1. Pandelis Mitsis, 2015. "Effects of Minimum Wages on Total Employment: Evidence from Cyprus," Journal of Labor Research, Springer, vol. 36(3), pages 318-345, September.
    2. Amanda Gosling, 1996. "Minimum wages: possible effects on the distribution of income," Fiscal Studies, Institute for Fiscal Studies, vol. 17(4), pages 31-48, November.
    3. Pandelis Mitsis, 2012. "Effects of minimum wages on total employment where the legislative coverage is limited: Evidence from Cyprus time series data," University of Cyprus Working Papers in Economics 05-2012, University of Cyprus Department of Economics.
    4. Pandelis Mitsis, 2019. "The Impact of the Minimum Wage on Wages and Work in Cyprus," Cyprus Economic Policy Review, University of Cyprus, Economics Research Centre, vol. 13(2), pages 72-101, December.

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