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Wage controversies: real wage stagnation, inequality and labour market institutions

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  • Machin, Stephen

Abstract

Weak real wage growth, low wage work and higher wage inequality than the past are features of contemporary labour markets the world over. Longstanding wage controversies in economics are of relevance to them. This paper studies what has happened to wages in the British labour market over the past sixty years, connecting the observed trends to some of these wage controversies. The focus is on the role of labour market institutions for wage inequality, real wage stagnation and shifting wage norms. Given that UK real wages have stagnated for the longest duration of the past two centuries, and inequality remains high, the paper concludes with discussion of where inclusive real wage growth can come from to boost workers’ living standards as it did in the past.

Suggested Citation

  • Machin, Stephen, 2024. "Wage controversies: real wage stagnation, inequality and labour market institutions," LSE Research Online Documents on Economics 122220, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:122220
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    References listed on IDEAS

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    1. David Card, 2022. "Who Set Your Wage?," American Economic Review, American Economic Association, vol. 112(4), pages 1075-1090, April.
    2. David S. Lee, 1999. "Wage Inequality in the United States During the 1980s: Rising Dispersion or Falling Minimum Wage?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(3), pages 977-1023.
    3. Dickens, Richard & Machin, Stephen & Manning, Alan, 1999. "The Effects of Minimum Wages on Employment: Theory and Evidence from Britain," Journal of Labor Economics, University of Chicago Press, vol. 17(1), pages 1-22, January.
    4. Stephen Machin & Alan Manning, 1994. "The Effects of Minimum Wages on Wage Dispersion and Employment: Evidence from the U.K. Wages Councils," ILR Review, Cornell University, ILR School, vol. 47(2), pages 319-329, January.
    5. Richard Dickens & Alan Manning, 2004. "Has the national minimum wage reduced UK wage inequality?," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 167(4), pages 613-626, November.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    wage controversies; real wages; labour market institutions; employer and worker power; The author acknowledges the Economic and Social Research Council for funding support through the LSE Centre for Economic Performance.;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects

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