IFS Working Paper (W98/09)

The changing distribution of male wages in the UK, 1966-1992

Date: 01 January 1998
ISSN: 1742-0415
JEL classification: D31, J31
DOI: 10.1920/wp.ifs.1998.9809
This paper uses microeconomic data from the UK Family Expenditure Surveys (FES) and the General Household Surveys (GHS) to describe and explain changes in the distribution of male wages. Since the late 1970s wage inequality has risen very fast in the UK, and this rise is characterised both by increasing education and age differentials. We show that a large part of the changes in the UK can be summarised quite simply as increases in education differentials and a decline of growth of entry level wages which persist subsequently. This fact we interpret as cohort eects. We also show that, like in the US, an important aspect of rising wage inequality is increased within-group wage dispersion. Finally we use the GHS to evaluate the role of alternative education measures.