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Small Firms, Contracting‐out, Computers and Wage Inequality: Evidence from UK Manufacturing

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  • Jonathan Heskel

Abstract

What demand‐side and institutional factors raised the skilled wage premium over the 1980s in UK manufacturing? Using a panel of 80 industries over 1980–9, we find that (1) the average skill premium rose by around 13 percentage points; (2) computer introduction explains around 50% of thisrise; (3) the growth in small firms and in contracting‐out together explain around 20% of the rise; and (4) the fall in unionization explains around 15% of the rise.

Suggested Citation

  • Jonathan Heskel, 1999. "Small Firms, Contracting‐out, Computers and Wage Inequality: Evidence from UK Manufacturing," Economica, London School of Economics and Political Science, vol. 66(261), pages 1-21, February.
    • Handle: RePEc:bla:econom:v:66:y:1999:i:261:p:1-21
    DOI: 10.1111/1468-0335.00153
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    Cited by:

    1. Tomiura, Eiichi, 2005. "Foreign outsourcing and firm-level characteristics: Evidence from Japanese manufacturers," Journal of the Japanese and International Economies, Elsevier, vol. 19(2), pages 255-271, June.
    2. Rimler, Judit, 2003. "Ecset vagy egér. Mesterségbeli tudás és magas szintű technika [Brush or mouse. Occupational capabilities and high technology]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(12), pages 1095-1114.
    3. Christopher H. Wheeler, 2007. "Industry localisation and earnings inequality: Evidence from U.S. manufacturing," Papers in Regional Science, Wiley Blackwell, vol. 86(1), pages 77-100, March.
    4. Paola Gritti & Riccardo Leoni, 2013. "The impact on wages of generic competencies, psychological capital, new work practices and digital technologies," Working Papers (2013-) 1301, University of Bergamo, Department of Management, Economics and Quantitative Methods.
    5. Riccardo Leoni & Paola Gritti, 2017. "Institutional Wage Setting, Distinctive Competencies and Wage Premia," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 3(1), pages 71-111, March.
    6. Indjikian, Rouben & Siegel, Donald S., 2005. "The Impact of Investment in IT on Economic Performance: Implications for Developing Countries," World Development, Elsevier, vol. 33(5), pages 681-700, May.
    7. Kjell G. Salvanes & Svein Erik Førre, 2001. "Job Creation, Heterogeneous Workers and Technical Change: Matched Worker/Plant Data Evidence from Norway," Discussion Papers 304, Statistics Norway, Research Department.
    8. Rimler, Judit, 2005. "Számítógép-használat és kreativitás [Computer use and creativity]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(12), pages 991-1009.
    9. Simon C. Parker, 2010. "Contracting Out, Public Policy And Entrepreneurship," Scottish Journal of Political Economy, Scottish Economic Society, vol. 57(2), pages 119-144, May.
    10. Haskel, Jonathan E. & Slaughter, Matthew J., 2002. "Does the sector bias of skill-biased technical change explain changing skill premia?," European Economic Review, Elsevier, vol. 46(10), pages 1757-1783, December.
    11. Lücke, Matthias, 1999. "Sectoral value added prices, TFP growth, and the low-skilled wage in high-income countries," Kiel Working Papers 923, Kiel Institute for the World Economy (IfW Kiel).

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