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Accounting for changes in income inequality: decomposition analyses for Great Britain, 1968-2009

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  • Brewer, Mike
  • Wren-Lewis, Liam

Abstract

We analyse income inequality in Great Britain over the period 1968-2009 in order to understand why income inequality rose very rapidly over the period 1978-91 and then stopped rising. We find that earnings inequality has risen fairly steadily since 1978, but other factors that caused inequality to rise in 1978-91 have since reversed. Inequality in investment and pension income has fallen since 1991, as has inequality between those with and without employment. Furthermore, certain household types notably the elderly and those with young children which had relatively low incomes in 1978-91 have seen their incomes converge with others.

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File URL: https://www.iser.essex.ac.uk/publications/working-papers/iser/2012-17.pdf
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Bibliographic Info

Paper provided by Institute for Social and Economic Research in its series ISER Working Paper Series with number 2012-17.

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Date of creation: 29 Aug 2012
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Publication status: published
Handle: RePEc:ese:iserwp:2012-17

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Postal: Publications Office, Institute for Social and Economic Research, University of Essex, Wivenhoe Park, Colchester, Essex CO4 3SQ UK
Phone: 44-1206-872957
Fax: 44-1206-873151
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Web page: https://www.iser.essex.ac.uk/
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Postal: Publications Office, Institute for Social and Economic Research, University of Essex, Wivenhoe Park, Colchester, Essex CO4 3SQ UK
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Web: https://www.iser.essex.ac.uk/publications/

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References

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  1. Shorrocks, Anthony F, 1984. "Inequality Decomposition by Population Subgroups," Econometrica, Econometric Society, vol. 52(6), pages 1369-85, November.
  2. Fräßdorf, Anna & Grabka, Markus M. & Schwarze, Johannes, 2011. "The Impact of Household Capital Income on Income Inequality - A Factor Decomposition Analysis for the UK, Germany and the USA," EconStor Open Access Articles, ZBW - German National Library of Economics, pages 35-56.
  3. Carlo Fiorio & Stephen Jenkins, 2007. "Regression-based inequality decomposition," United Kingdom Stata Users' Group Meetings 2007 03, Stata Users Group.
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  7. Prasad, Eswar, 2002. "Wage Inequality in the United Kingdom, 1975-99," IZA Discussion Papers 510, Institute for the Study of Labor (IZA).
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  9. Gregg, Paul & Waldfogel, Jane & Washbrook, Elizabeth, 2006. "Family expenditures post-welfare reform in the UK: Are low-income families starting to catch up?," Labour Economics, Elsevier, vol. 13(6), pages 721-746, December.
  10. Richard V. Burkhauser & Shuaizhang Feng & Stephen P. Jenkins, 2007. "Using the P90/P10 Index to Measure US Inequality Trends with Current Population Survey Data: A View from Inside the Census Bureau Vaults," Discussion Papers of DIW Berlin 699, DIW Berlin, German Institute for Economic Research.
  11. Heathcote, Jonathan & Perri, Fabrizio & Violante, Giovanni L, 2009. "Unequal We Stand: An Empirical Analysis of Economic Inequality in the United States, 1967-2006," CEPR Discussion Papers 7538, C.E.P.R. Discussion Papers.
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  15. Shorrocks, A F, 1982. "Inequality Decomposition by Factor Components," Econometrica, Econometric Society, vol. 50(1), pages 193-211, January.
  16. repec:ese:iserwp:2004-05 is not listed on IDEAS
  17. Thomas Lemieux, 2007. "The Changing Nature of Wage Inequality," NBER Working Papers 13523, National Bureau of Economic Research, Inc.
  18. Stephen Jenkins & Philippe Kerm, 2005. "Accounting for income distribution trends: A density function decomposition approach," Journal of Economic Inequality, Springer, vol. 3(1), pages 43-61, April.
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  22. Maarten Goos & Alan Manning, 2003. "Lousy and Lovely Jobs: the Rising Polarization of Work in Britain," CEP Discussion Papers dp0604, Centre for Economic Performance, LSE.
  23. Frank Cowell & Carlo V. Fiorio, 2009. "Inequality decomposition: a reconciliation," LSE Research Online Documents on Economics 25431, London School of Economics and Political Science, LSE Library.
  24. Myeong-Su Yun, 2006. "Earnings Inequality In Usa, 1969-99: Comparing Inequality Using Earnings Equations," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 52(1), pages 127-144, 03.
  25. L. Rachel Ngai, 2012. "Comment," NBER International Seminar on Macroeconomics, University of Chicago Press, vol. 8(1), pages 47 - 52.
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  27. repec:ese:iserwp:2012-08 is not listed on IDEAS
  28. Jenkins, Stephen P, 1995. "Accounting for Inequality Trends: Decomposition Analyses for the UK, 1971-86," Economica, London School of Economics and Political Science, vol. 62(245), pages 29-63, February.
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Cited by:
  1. Lehmann, Hartmut & Silvagni, Maria Giulia, 2013. "Is There Convergence of Russia's Regions? Exploring the Empirical Evidence: 1995–2010," IZA Discussion Papers 7603, Institute for the Study of Labor (IZA).

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