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
Big ideas: rising wage inequality
Stephen Machin surveys significant research findings on wage inequality that have emerged from the CEP over the past three decades. Read more...
Lousy and Lovely Jobs: the Rising Polarization of Work in Britain
Maarten Goos and Alan Manning present evidence that employment in the UK is polarizing into lovely and lousy jobs and that a plausible explanation for this is the hypothesis proposed by Autor, Levy and Murnane (2003). Read more...
Labour market inequality publications
Tito Boeri, Giulia Giupponi, Alan B. Krueger and Stephen Machin
1 October 2020
Nitika Bagaria, Felix Koenig, Barbara Petrongolo and John Van Reenen
1 November 2019
Nikhil Datta, Giulia Giupponi and Stephen Machin
28 June 2019
Georg Graetz and Guy Michaels
1 December 2018
Guy Michaels, Ashwini Natraj and John Van Reenen
1 March 2014
Brian Bell and John Van Reenen
1 February 2014
Maarten Goos and Alan Manning
1 February 2007
A Gosling, Stephen Machin and Costas Meghir
1 October 2000
John Van Reenen
1 February 1996