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

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  • Manning, Alan

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. These 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 relative employment did not fall because the female labour market is, in part, monopsonistic. Copyright 1996 by The London School of Economics and Political Science.

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  • Manning, Alan, 1996. "The Equal Pay Act as an Experiment to Test Theories of the Labour Market," Economica, London School of Economics and Political Science, vol. 63(250), pages 191-212, May.
  • Handle: RePEc:bla:econom:v:63:y:1996:i:250:p:191-212
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    Cited by:

    1. Giovanni Sulis, 2011. "What can monopsony explain of the gender wage differential in Italy?," International Journal of Manpower, Emerald Group Publishing, vol. 32(4), pages 446-470, July.
    2. Dessing, Maryke, 2004. "Implications for minimum-wage policies of an S-shaped labor-supply curve," Journal of Economic Behavior & Organization, Elsevier, vol. 53(4), pages 543-568, April.
    3. 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.
    4. Boris Hirsch, 2016. "Gender wage discrimination," IZA World of Labor, Institute for the Study of Labor (IZA), pages 310-310, November.
    5. Barth, Erling & Dale-Olsen, Harald, 2009. "Monopsonistic discrimination, worker turnover, and the gender wage gap," Labour Economics, Elsevier, vol. 16(5), pages 589-597, October.
    6. Florence Jaumotte, 2003. "Female Labour Force Participation: Past Trends and Main Determinants in OECD Countries," OECD Economics Department Working Papers 376, OECD Publishing.
    7. Florence Jaumotte, 2005. "Les femmes sur le marché du travail : Évidence empirique sur le rôle des politiques économiques et autres déterminants dans les pays de l'OCDE," Revue économique de l'OCDE, Éditions OCDE, vol. 2003(2), pages 57-123.
    8. Laura Giuliano, 2013. "Minimum Wage Effects on Employment, Substitution, and the Teenage Labor Supply: Evidence from Personnel Data," Journal of Labor Economics, University of Chicago Press, vol. 31(1), pages 155-194.
    9. Gosling, Amanda, 2003. "The Changing Distribution of Male and Female Wages, 1978-2000: Can the Simple Skills Story be Rejected?," CEPR Discussion Papers 4045, C.E.P.R. Discussion Papers.

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