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SHORT‐ AND LONG‐RUN DECOMPOSITIONS OF UK WAGE INEQUALITY CHANGES
Author(s) -
Huw Edwards Terence,
Whalley John
Publication year - 2007
Publication title -
bulletin of economic research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.227
H-Index - 29
eISSN - 1467-8586
pISSN - 0307-3378
DOI - 10.1111/j.0307-3378.2007.00252.x
Subject(s) - economics , wage inequality , inequality , wage , competition (biology) , labour economics , work (physics) , short run , production (economics) , technological change , macroeconomics , mechanical engineering , mathematical analysis , ecology , mathematics , engineering , biology
This paper focuses on the decomposition of observed increases in UK wage inequality since 1979 into the component factors of competition from low‐wage imports and technological change. Building on recent work by Abrego and Whalley, we argue that the length of production run and degree of fixity of factors is crucial in such analyses. If the response of labour markets to date is a short‐run response, in which factors and output have not adjusted fully, then analysis of the causes of increased inequality is substantially altered relative to a long‐run factors mobile world.