Post on 05-Jan-2016
description
www.skope.ox.ac.uk
Education, occupations and wage inequality in the UK since the
1980s
Craig HolmesSKOPE and Oxford University
OUDE Research Day, October 9th 2013
www.skope.ox.ac.uk
Introduction• Wage inequality in the UK has risen since the 1980s
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Introduction• Rising upper- and lower-tail inequality until mid 1990s• Small increases in upper-tail inequality since mid 1990s (except at very
top), coupled with falling inequality at bottom end
0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.00.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
1987-2001
1994-2007
Percentile
Real
wag
e gr
owth
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Workforce composition• Education and earnings are strongly correlated• Increasing the size of the more educated groups drives up inequality
0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90 1.00
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
Total estimated composition
Education
Percentile
Real
wag
e gr
owth
, 198
7-20
01
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Workforce composition• Other compositional changes also have inequality-increasing effects• This is true for past decade too
0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90 1.00
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
Total estimated composition
Occupations
Education
Unions
Percentile
Real
wag
e gr
owth
, 198
7-20
01
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The wage structure• Overall effect on inequality depends on structure of wages associated with
these variables• For education:
– Increasing demand for skills widens earnings inequality between the more and less educated groups
– Increasing education attainment could reduce earnings inequalities as earnings benefits spread more widely
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The wage structure• We do see inequality reducing changes in the wage structure...
0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90 1.00
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%Composition
Wage structure
0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90 1.00
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
Composition
Wage structure
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The wage structure• ...but these are not attributable to educational attainment
0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90 1.00
-3.0%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
Degree
Post compulsory
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Distribution of jobs• Seems to reflect ‘correction’ of compositional changes – not as many
people in high wage jobs as we’d predict
Year Jobs earning below 2/3 * median hourly
wage
Jobs earning above 1.5* median hourly
wageInitial (1987) 20.2% 23.4%Composition effects only 24.0% 27.1%Final (2001) 23.0% 25.6%Initial (1994) 22.6% 25.2%Composition effects only 25.2% 27.3%Final (2007) 21.3% 25.9%
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Distribution of jobs
• Result: increasingly heterogeneous occupational groups
Low pay Middle pay High pay
-5.00%
-4.00%
-3.00%
-2.00%
-1.00%
0.00%
1.00%
2.00%
3.00%
Professionals Managerial
Intermediate Manual routine
Admin routine Service
Chan
ge in
em
ploy
men
t sha
re, 1
994-
2007
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Distribution of jobs
• Graduates only:
Low pay Middle pay High pay
-5.00%
-4.00%
-3.00%
-2.00%
-1.00%
0.00%
1.00%
2.00%
Professionals Managerial
Intermediate Manual routine
Admin routine Service
Chan
ge in
em
ploy
men
t sha
re, 1
994-
2007
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Conclusion• Policymakers tend to work with a ‘room at the top’ mindset focus on
supply of skills through increasing educational attainment• Higher wage jobs are more scarce that this suggests – limits the ability of
education to reduce labour market inequalities• The problem may be a different sort of ‘demand for skill’ problem to the
one the UK has often faced – not a market failure or a problem of short-termism.
• In the mean time, should leads to a great concern about intergenerational inequalities
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Contact Details
Craig Holmes
ESRC Centre on Skills, Knowledge and Organisational Performance (SKOPE),
Email: craig.holmes@pmb.ox.ac.uk