Skip to main content

Labour market inequality

Wage inequality has grown enormously since the 1980s. Our research helped understand the extent to which this could be explained by "skills biased technological change" where technological advances, such as computerisation, benefit more skilled or educated workers and hurt the less skilled or educated.

Our work on labour market polarisation helps provide a more nuanced view demonstrating how computerisation could turn "middling" into "lousy" jobs, while helping stabilise some lower paying jobs. Our research on industrial robots suggests renewed pressure on some of these lower paid jobs.

Inequality at the very top of the wage distribution has continued to widen. Possible explanations include the superstar firm theory where a small number of technologically advanced and productive firms see large increases in market shares. Other work has focused on the role of financial sector workers' bonuses in the huge rise of the share of earnings going to those at the very top of the pay distribution in the UK.

In contrast, real wages have stagnated since the financial crisis. At the same time, we have seen the growth of gig-economy jobs and zero hours contracts, which are associated with low wages, job insecurity and lack of social protection, the topic of the first major survey ever undertaken of these workers by CEP in 2019.

Complementary work considering the impact of the minimum wage on reducing wage inequality is found in the Labour Market Institutions Project and the enduring pay gap between men and women is dealt with in the Gender in the Labour Market Project

Labour market inequality publications

Search Labour markets publications
Select another type
Select another topic