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Recent Changes in British Wage Inequality: Evidence from Large Firms and Occupations

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  • Daniel Schaefer
  • Carl Singleton

Abstract

Using a linked employer–employee dataset covering large firms, we present new evidence on British wage inequality trends over the past two decades. Differences between firms in the average wages they paid did not drive these trends. Between 1996 and 2005, greater wage variance within firms accounted for 86% of the total increase in wage variance among employees. In the following decade, wage inequality between firms continued to increase, whereas overall wage dispersion decreased. Approximately all the contribution to inequality dynamics from estimated firm‐specific factors, throughout the employee wage distribution, disappears after accounting for the changing occupational content of wages.

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  • Daniel Schaefer & Carl Singleton, 2020. "Recent Changes in British Wage Inequality: Evidence from Large Firms and Occupations," Scottish Journal of Political Economy, Scottish Economic Society, vol. 67(1), pages 100-125, February.
    • Handle: RePEc:bla:scotjp:v:67:y:2020:i:1:p:100-125
    DOI: 10.1111/sjpe.12225
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    Cited by:

    1. Daniel Schaefer & Carl Singleton, 2020. "Nominal Wage Adjustments and the Composition of Pay: New Evidence from Payroll Data," Economics Discussion Papers em-dp2020-01, Department of Economics, University of Reading.
    2. Brian D. Bell & Nicholas Bloom & Jack Blundell, 2021. "This Time is Not so Different: Income Dynamics During the COVID-19 Recession," NBER Working Papers 28871, National Bureau of Economic Research, Inc.
    3. Daniel Schaefer & Carl Singleton, . "The Extent of Downward Nominal Wage Rigidity: New Evidence from Payroll Data," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics.
    4. Magda, Iga & Gromadzki, Jan & Moriconi, Simone, 2021. "Firms and wage inequality in Central and Eastern Europe," Journal of Comparative Economics, Elsevier, vol. 49(2), pages 499-552.
    5. Sarah Louise Jewell & Giovanni Razzu & Carl Singleton, 2020. "Who Works for Whom and the UK Gender Pay Gap," British Journal of Industrial Relations, London School of Economics, vol. 58(1), pages 50-81, March.
    6. Daniel Schaefer & Carl Singleton, 2017. "Real Wages and Hours in the Great Recession: Evidence from Firms and their Entry-Level Jobs," CESifo Working Paper Series 6766, CESifo.
    7. Marco Fongoni & Daniel Schaefer & Carl Singleton, 2023. "Why wages don't fall in jobs with incomplete contracts," Economics Discussion Papers em-dp2023-12, Department of Economics, University of Reading.
    8. John Forth & Nikolaos Theodoropoulos & Alex Bryson, 2023. "The role of the workplace in ethnic wage differentials," British Journal of Industrial Relations, London School of Economics, vol. 61(2), pages 259-290, June.
    9. Phan, Van & Singleton, Carl & Bryson, Alex & Forth, John & Ritchie, Felix & Stokes, Lucy & Whittard, Damian, 2022. "Accounting for Firms in Ethnicity Wage Gaps throughout the Earnings Distribution," IZA Discussion Papers 15284, Institute of Labor Economics (IZA).
    10. Brian Bell & Nicholas Bloom & Jack Blundell, 2022. "Income dynamics in the United Kingdom and the impact of the Covid‐19 recession," Quantitative Economics, Econometric Society, vol. 13(4), pages 1849-1878, November.
    11. Victoria Gregory, 2020. "Firms as Learning Environments: Implications for Earnings Dynamics and Job Search," Working Papers 2020-036, Federal Reserve Bank of St. Louis, revised Sep 2023.
    12. Helmut Herwartz & David Rodriguez-Justicia & Bernd Theilen, 2022. "A New Measure of Wage Risk: Occupation-Specific Evidence for Germany," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 164(3), pages 1427-1462, December.

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    More about this item

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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