Wage Inequality in the United Kingdom, 1975-99
by Eswar Prasad
(June 2002)
published in: IMF Staff Papers, 2002, 49 (3), 339-362

This paper uses micro data from the New Earnings Survey to document that cross-sectional wage inequality in the U.K., which rose sharply in the 1980s and continued to rise moderately through the mid-1990s, has remained essentially unchanged in the latter half of the 1990s. As in the U.S., changes in within-group inequality are shown to account for a substantial fraction of the rise in wage dispersion that has occurred over the last 25 years. However, shifts in the structure of employment including changes in the occupational and industrial composition of aggregate employment are also shown to have had important effects on the evolution of wage inequality. In addition, there has been a significant convergence of the wage distributions for men and women; this has had a stabilizing effect on the overall wage distribution.
Text: See Discussion Paper No. 510