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Accounting for Changes in Income Inequality: Decomposition Analyses for the UK, 1978–2008

Author

Listed:
  • Mike Brewer

    (University of Essex)

  • Liam Wren-Lewis

    (PSE - Paris-Jourdan Sciences Economiques - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics)

Abstract

We analyse income inequality in the UK from 1978 to 2009 in order to understand why income inequality rose very rapidly from 1978 to 1991 but then remained broadly unchanged. We find that inequality in earnings among employees has risen fairly steadily since 1978, but other factors that caused income inequality to rise before 1991 have since gone into reverse. Inequality in investment and pension income has fallen since 1991, as has inequality between those with and without employment. Furthermore, certain household types – notably the elderly and those with young children – which had relatively low incomes in the period to 1991 have seen their incomes converge with others.

Suggested Citation

  • Mike Brewer & Liam Wren-Lewis, 2016. "Accounting for Changes in Income Inequality: Decomposition Analyses for the UK, 1978–2008," PSE - Labex "OSE-Ouvrir la Science Economique" halshs-01313784, HAL.
    • Handle: RePEc:hal:pseose:halshs-01313784
    Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-01313784
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    Cited by:

    1. Robin Jessen, 2016. "Why Has Income Inequality in Germany Increased from 2002 to 2011? A Behavioral Microsimulation Decomposition," SOEPpapers on Multidisciplinary Panel Data Research 879, DIW Berlin, The German Socio-Economic Panel (SOEP).
    2. Richard V. Burkhauser & Nicolas Hérault & Stephen P. Jenkins & Roger Wilkins, 2017. "Survey Under-Coverage of Top Incomes and Estimation of Inequality: What is the Role of the UK’s SPI Adjustment?," NBER Working Papers 23539, National Bureau of Economic Research, Inc.
    3. Richard V. Burkhauser & Nicolas Hérault & Stephen P. Jenkins & Roger Wilkins, 2017. "Survey Under-Coverage of Top Incomes and Estimation of Inequality: What Is the Role of the UK’s SPI Adjustment?," Melbourne Institute Working Paper Series wp2017n16, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    4. Olivier Bargain, 2017. "Welfare analysis and redistributive policies," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 15(4), pages 393-419, December.
    5. Konstantinos Angelopoulos & Andrea Benecchi & Jim Malley, 2017. "Can Subsidising Job-Related Training Reduce Inequality?," CESifo Working Paper Series 6605, CESifo Group Munich.
    6. repec:bla:econom:v:84:y:2017:i:334:p:157-179 is not listed on IDEAS
    7. Chris Belfield & Richard Blundell & Jonathan Cribb & Andrew Hood & Robert Joyce, 2017. "Two Decades of Income Inequality in Britain: The Role of Wages, Household Earnings and Redistribution," Economica, London School of Economics and Political Science, vol. 84(334), pages 157-179, April.
    8. Mauri Kotamäki & Joonas Ollonqvist, 2018. "Financial Incentives to Work Decomposed: The Finnish Case," Discussion Papers 119, Aboa Centre for Economics.
    9. Konstantinos Angelopoulos & Andrea Benecchi & James Malley, 2017. "Can subsidising job-related training reduce inequality?," Working Papers 2017_10, Business School - Economics, University of Glasgow.
    10. Laura A. Harvey & Jochen O. Mierau & James Rockey, 2017. "Inequality in an Equal Society," LWS Working papers 26, LIS Cross-National Data Center in Luxembourg.

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    Keywords

    Income Inequality;

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