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Recent shifts in wage inequality and the wage returns to education in Britain

Published online by Cambridge University Press:  26 March 2020

Stephen Machin
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Abstract

In this article I consider shifts in the structure of wages in Britain between the mid-1970s and mid-1990s. In the 1990s the rising gap between the highest and lowest paid was either stable or rose a little, but by nowhere near as much as in the 1980s. This seems to be, at least partially, due to the fact that faster educational upgrading has dampened down some of the rising wage differentials experienced by the more educated. However, demand still seems to be shifting in favour of the more highly educated and skilled because, despite the fact that there are many more workers with higher educational qualifications, their wages relative to other groups have not fallen. Finally, I argue that relative demand shifts in favour of the more educated and skilled are still more pronounced in more technologically advanced industries. This is in line with the notion, like much of the evidence based on industry demand shifts in the 1970s and 1980s, that technology is key to changes in labour market inequality.

Type
Articles
Information
National Institute Economic Review , Volume 166 , October 1998 , pp. 87 - 96
Copyright
Copyright © 1998 National Institute of Economic and Social Research

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Footnotes

This work draws on some DfEE funded work (joint with Susan Harkness) on ‘Graduate Earnings in Britain, 1974-95’ and on some of my joint work with John Van Reenen (Machin and Van Reenen, 1998). I would also like to thank Richard Dickens, Paul Gregg and Julian Steer for their help with some of the data.

References

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