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The Changing Structure of Male Earnings in Britain

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  • John Schmitt

Abstract

The paper uses data from the annual British General household Survey to examine changes in the structure of weekly earnings for full-time male employees aged 16 to 64 during the period 1974-1988. The principal findings are: (1) earnings inequality fell slightly in the second half of the 1970s only to grow sharply during the 1980s; (2) rising financial returns to education and labor market experience in the 1980s account for between one-third and one-half of the growth in earnings inequality during the 1980s; (3) the earnings if low-skilled workers increased by over 15 percent in real terms between 1974 and 1988. Rising returns to skills in the face of large increase in the supply of skilled labor suggest a substantial shift in labor demand in favor of skilled workers. Changes in British labor market institutions, particularly the decline in trade unions density may also help to explain part of the rise in inequality during the 1980s.

Suggested Citation

  • John Schmitt, 1993. "The Changing Structure of Male Earnings in Britain," CEP Discussion Papers dp0122, Centre for Economic Performance, LSE.
  • Handle: RePEc:cep:cepdps:dp0122
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Manning, Alan, 2000. "Movin' on up: Interpreting the Earnings-Experience Profile," Bulletin of Economic Research, Wiley Blackwell, vol. 52(4), pages 261-295, October.
    2. Vainiomäki, Jari, 1999. "Technology and skill-upgrading: Results from linked worker-plant data for Finnish manufacturing," MPRA Paper 44662, University Library of Munich, Germany, revised 2013.
    3. Engelmann, Sabine, 2012. "International trade, technical change and wage inequality in the U.K. economy," IAB Discussion Paper 201208, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    4. López Bóo, Florencia, 2010. "Returns to Education and Macroeconomic Shocks: Evidence from Argentina," IZA Discussion Papers 4753, Institute for the Study of Labor (IZA).
    5. Barrett, Alan & FitzGerald, John & Nolan, Brian, 2002. "Earnings inequality, returns to education and immigration into Ireland," Labour Economics, Elsevier, vol. 9(5), pages 665-680, November.
    6. Robin Naylor, 1995. "Unions in Decline?," Nordic Journal of Political Economy, Nordic Journal of Political Economy, vol. 22, pages 127-142.
    7. Jeff Borland, 1996. "Union Effects on Earnings Dispersion in Australia, 1986–1994," British Journal of Industrial Relations, London School of Economics, vol. 34(2), pages 237-248, June.
    8. Richard Blundell & Lorraine Dearden & Barbara Sianesi, 2003. "Evaluating the impact of education on earnings in the UK: Models, methods and results from the NCDS," IFS Working Papers W03/20, Institute for Fiscal Studies.
    9. David Metcalf, 1993. "Transformation of British Industrial Relations? Institutions, Conduct and Outcomes 1980-1990," CEP Discussion Papers dp0151, Centre for Economic Performance, LSE.
    10. Gregg, Paul & Manning, Alan, 1997. "Skill-biassed change, unemployment and wage inequality," European Economic Review, Elsevier, vol. 41(6), pages 1173-1200, June.

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