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Recent Changes in British Wage Inequality: Evidence from Large Firms and Occupations
Author(s) -
Schaefer Daniel,
Singleton Carl
Publication year - 2020
Publication title -
scottish journal of political economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.4
H-Index - 46
eISSN - 1467-9485
pISSN - 0036-9292
DOI - 10.1111/sjpe.12225
Subject(s) - wage dispersion , wage inequality , wage , economics , labour economics , variance (accounting) , inequality , distribution (mathematics) , efficiency wage , dispersion (optics) , demographic economics , mathematical analysis , physics , mathematics , accounting , optics
Using a linked employer–employee dataset covering large firms, we present new evidence on British wage inequality trends over the past two decades. Differences between firms in the average wages they paid did not drive these trends. Between 1996 and 2005, greater wage variance within firms accounted for 86% of the total increase in wage variance among employees. In the following decade, wage inequality between firms continued to increase, whereas overall wage dispersion decreased. Approximately all the contribution to inequality dynamics from estimated firm‐specific factors, throughout the employee wage distribution, disappears after accounting for the changing occupational content of wages.