IDEAS home Printed from https://ideas.repec.org/h/nbr/nberch/6750.html
   My bibliography  Save this book chapter

Labor Market Reforms and Changes in Wage Inequality in the United Kingdom and the United States

In: Seeking a Premier Economy: The Economic Effects of British Economic Reforms, 1980-2000

Author

Listed:
  • Amanda Gosling
  • Thomas Lemieux

Abstract

This paper compares trends in male and female hourly wage inequality in the United Kingdom and the United States between 1979 and 1998. Our main finding is that the extent and pattern of wage inequality became increasingly similar in the two countries during this period. We attribute this convergence to 'U.S. style' reforms in the U.K. labour market. In particular, we argue that the much steeper decline in unionisation in the United Kingdom explains why inequality increased faster than in the United States. For women, we conclude that the fall and subsequent recovery in the real value of the U.S. minimum wage explains why wage inequality increased faster in the United States than in the United Kingdom during the 1980s, while the opposite happened during the 1990s. Interestingly, the introduction of the National Minimum Wage in the U.K. in 1999 also contributed to the convergence in labour market institutions and wage inequality between the two countries.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Amanda Gosling & Thomas Lemieux, 2004. "Labor Market Reforms and Changes in Wage Inequality in the United Kingdom and the United States," NBER Chapters,in: Seeking a Premier Economy: The Economic Effects of British Economic Reforms, 1980-2000, pages 275-312 National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberch:6750
    as

    Download full text from publisher

    File URL: http://www.nber.org/chapters/c6750.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Machin, Stephen, 1996. "Wage Inequality in the UK," Oxford Review of Economic Policy, Oxford University Press, vol. 12(1), pages 47-64, Spring.
    2. DiNardo, John & Fortin, Nicole M & Lemieux, Thomas, 1996. "Labor Market Institutions and the Distribution of Wages, 1973-1992: A Semiparametric Approach," Econometrica, Econometric Society, vol. 64(5), pages 1001-1044, September.
    3. David Card & Thomas Lemieux, 2001. "Can Falling Supply Explain the Rising Return to College for Younger Men? A Cohort-Based Analysis," The Quarterly Journal of Economics, Oxford University Press, vol. 116(2), pages 705-746.
    4. Stewart, Mark B, 1983. "Relative Earnings and Individual Union Membership in the United Kingdom," Economica, London School of Economics and Political Science, vol. 50(198), pages 111-125, May.
    5. Paul Beaudry & David A. Green, 2003. "Wages and Employment in the United States and Germany: What Explains the Differences?," American Economic Review, American Economic Association, vol. 93(3), pages 573-602, June.
    6. Gosling, Amanda & Machin, Stephen, 1995. "Trade Unions and the Dispersion of Earnings in British Establishments, 1980-90," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 57(2), pages 167-184, May.
    7. Francine D. Blau, 1998. "Trends in the Well-Being of American Women, 1970-1995," Journal of Economic Literature, American Economic Association, vol. 36(1), pages 112-165, March.
    8. Amanda Gosling & Stephen Machin & Costas Meghir, 2000. "The Changing Distribution of Male Wages in the U.K," Review of Economic Studies, Oxford University Press, vol. 67(4), pages 635-666.
    9. David S. Lee, 1999. "Wage Inequality in the United States During the 1980s: Rising Dispersion or Falling Minimum Wage?," The Quarterly Journal of Economics, Oxford University Press, vol. 114(3), pages 977-1023.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Amuedo Dorantes, Catalina & De la Rica Goiricelaya, Sara, 2005. "The Impact of Gender Segregation on Male-Female Wage Differentials," DFAEII Working Papers 2005-16, University of the Basque Country - Department of Foundations of Economic Analysis II.
    2. John T. Addison & Ralph W. Bailey & W. Stanley Siebert, 2009. "Wage Dispersion in a Partially Unionized Labor Force," GEMF Working Papers 2009-09, GEMF, Faculty of Economics, University of Coimbra.
    3. Felipe Balmaceda, 2008. "Firm-Provided Training and Labor Market Policies," Documentos de Trabajo 252, Centro de Economía Aplicada, Universidad de Chile.
    4. Jens Rubart, 2006. "Dismissal Protection or Wage Flexibility," Computing in Economics and Finance 2006 406, Society for Computational Economics.
    5. Addison, John T. & Siebert, W. Stanley, 2002. "Changes in Collective Bargaining in the U.K," IZA Discussion Papers 562, Institute for the Study of Labor (IZA).
    6. Adriaan S. Kalwij & Rob Alessie, 2007. "Permanent and transitory wages of British men, 1975-2001: year, age and cohort effects," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(6), pages 1063-1093.
    7. Abigail Mcknight & T. Tsang, 2013. "GINI Country Report: Growing Inequalities and their Impacts in the United Kingdom," GINI Country Reports united_kingdom, AIAS, Amsterdam Institute for Advanced Labour Studies.
    8. Clément Imbert, 2011. "Decomposing wage inequality: Public and private sectors in Vietnam 1993-2006," Working Papers halshs-00564653, HAL.
    9. Peng, Fei & Kang, Lili, 2013. "Cyclical changes in the wage structure of the United Kingdom: a historical review of the GHS 1972-2002," MPRA Paper 47210, University Library of Munich, Germany.
    10. Clément Imbert, 2011. "Decomposing wage inequality: Public and private sectors in Vietnam 1993-2006," PSE Working Papers halshs-00564653, HAL.
    11. R. Alessie & A.S. Kalwij, 2003. "Permanent and Transitory Wage Inequality of British Men, 1975-2001: Year, Age and Cohort Effects," Working Papers 03-04, Utrecht School of Economics.
    12. Louis-Philippe Beland & Bulent Unel, 2015. "Democrats and Unions," Departmental Working Papers 2015-02, Department of Economics, Louisiana State University.
    13. Sara de la Rica, 2007. "Segregación ocupacional y diferencias salariales por género en España: 1995-2002," Working Papers 2007-35, FEDEA.
    14. Falco, Paolo & Haywood, Luke, 2016. "Entrepreneurship versus joblessness: Explaining the rise in self-employment," Journal of Development Economics, Elsevier, vol. 118(C), pages 245-265.
    15. Amuedo-Dorantes, Catalina & de la Rica, Sara, 2005. "The Impact of Gender Segregation on Male-Female Wage Differentials: Evidence from Matched Employer-Employee Data for Spain," IZA Discussion Papers 1742, Institute for the Study of Labor (IZA).
    16. repec:use:tkiwps:044 is not listed on IDEAS
    17. repec:eme:rleczz:s0147-9121(06)26009-6 is not listed on IDEAS
    18. David Card & Thomas Lemieux & W. Craig Riddell, 2003. "Unionization and Wage Inequality: A Comparative Study of the U.S, the U.K., and Canada," NBER Working Papers 9473, National Bureau of Economic Research, Inc.
    19. John T. Addison & Ralph W. Bailey & W. Stanley Siebert, 2007. "The Impact of Deunionisation on Earnings Dispersion Revisited," Research in Labor Economics,in: Aspects of Worker Well-Being, volume 26, pages 337-363 Emerald Publishing Ltd.
    20. Addison, John T. & Teixeira, Paulino & Evers, Katalin & Kölling, Arnd, 2017. "Changes in Bargaining Status and Intra-Plant Wage Dispersion in Germany. Much Ado about Nothing?," GLO Discussion Paper Series 24, Global Labor Organization (GLO).
    21. John Schmitt, 2005. "Labor Markets and Economic Inequality in the United States Since the End of the 1970s," CEPR Reports and Issue Briefs 2005-14, Center for Economic and Policy Research (CEPR).

    More about this item

    JEL classification:

    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberch:6750. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: () or (Joanne Lustig). General contact details of provider: http://edirc.repec.org/data/nberrus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.