CEP: research - labour markets

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Labour Markets:

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  --rise and fall of
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  --wage inequality.
  --social exclusion.
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  --southern european
     labour markets.
  --state of working
     britain.
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  --inequalities in
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Wage Inequality

The gap between rich and poor has widened dramatically in some countries in the last 25 years (e.g. the US and the UK) but remained constant in others (e.g. the Continental European countries).

CEP research has been very active in examining these trends and the explanations for them. Most research has concentrated on the UK. The CEP produces 'The State of Working Britain' which surveys the latest developments in the UK labour market. But, the trends in other countries are often different and CEP is active in trying to understand these trends as well, notably in the study of southern European labour markets

One important factor is technology which, slowly but surely, dramatically changes the demand for different types of labour. Maarten Goos and Alan Manning have argued in DP 604: Lousy and Lovely Jobs: the Rising Polarization of Work in Britain that technology in recent years has tended to increase the number of both good jobs and bad jobs but to destroy jobs in the middle of the wage distribution. This job polarization contributes to the rise in wage inequality in the UK.

Although technology has a profound impact on the demand for labour, wage inequality is only produced as a result if changes in the supply of skills do not keep pace with changes in the demand. Work by Dan Devroye and Richard Freeman, DP552: Does Inequality in Skills Explain Inequality of Earnings Across Advanced Countries? explores whether differences in wage inequality across OECD countries can be explained by inequality in skills.

Institutions like minimum wages and trade unions may also have an important role to play in influencing wage inequality.

CEP research on the impact of the UK's National Minimum Wage on wage inequality can be found in Richard Dickens and Alan Manning's paper DP533: Has The National Minimum Wage Reduced UK Wage Inequality?, which finds that the NMW has had only a modest impact of wage inequality because it has been set at a relatively low level and spill-over effects have been very modest

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