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Mind the Gap

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  • Paul Gregg
  • Jonathan Wadsworth

Abstract

Britain, perhaps uniquely, has experienced simultaneoud rises in both wage inequality and polarisation of eployment across households over the past twenty years. This article investigates the inter-relations of these two trends by examining the changing nature of new jobs and the characteristics of the individuals who fill them. One of the principal reasons why new jobs are increasingly taken by individuals with partners in work is the low wages associated with these jobs. Using a simple matching framework, a rising share of bad, low quality, jobs in the stock of entry jobs can be shown to be consistent with a positive labour supply shock, rising separation rates, cost or productivity shocks, all of which have hit Britain, to some degree, over the past fifteen years. Using household survey data, the paper shows that real entry wages have fallen relative to the wages of those in other jobs. Entry jobs are dominated by high turnover forms of employment, part-time, temporary working and self-employment. Low wage/high turnover forms of working are less likely to be filled by those from workless households. Rising wage inequality re-enforces employment polarisation.

Suggested Citation

  • Paul Gregg & Jonathan Wadsworth, 1996. "Mind the Gap," CEP Discussion Papers dp0303, Centre for Economic Performance, LSE.
  • Handle: RePEc:cep:cepdps:dp0303
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    Cited by:

    1. Lehmann, Hartmut & Wadsworth, Jonathan, 1997. "New jobs, worklessness and households in Poland," European Economic Review, Elsevier, vol. 41(3-5), pages 915-923, April.
    2. Machin, Stephen, 1997. "The decline of labour market institutions and the rise in wage inequality in Britain," European Economic Review, Elsevier, vol. 41(3-5), pages 647-657, April.
    3. Alan Manning, 1999. "Pretty Vacant: Recruitment in Low Wage Labour Markets," CEP Discussion Papers dp0418, Centre for Economic Performance, LSE.
    4. Lehmann, Hartmut & Wadsworth, Jonathan & Acquisti, Alessandro, 1999. "Grime and Punishment: Job Insecurity and Wage Arrears in the Russian Federation," Journal of Comparative Economics, Elsevier, vol. 27(4), pages 595-617, December.
    5. Santos, Miguel, 2010. "From Training to Labour Market. Holocletic Model," MPRA Paper 26617, University Library of Munich, Germany.

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