Results

CEP discussion paper

Capital-skill complementarity in firms and in the aggregate economy

We study capital-skill complementarity in a multi-sector framework featuring firm-specific, multi-factor production functions and allowing for firm-specific factor-price wedges. We characterize the elasticity of the skil...Read more...

Blog

Vox EU:

Closing the health gap: How chronic illness drives health inequality early on

Though health disparities have long been the subject of research and debate, life expectancy gaps between rich and poor remain striking, even in countries with universal access to healthcare. This column analyses the roo...Read more...

Journal article

Oxford Open Economics:

Spatial disparities across labour markets

We consider disparities across local labour markets in Great Britain. Disparities in wages and employment rates are large and persistent, although smaller than 20 years ago. These disparities largely reflect the concentr...Read more...

Journal article

Oxford Open Economics:

Firms and inequality

We review the existing literature on falling business dynamism and present a new analysis using comprehensive UK firm-level panel data. Since the mid-1990s, there has been a large increase in UK firm-level inequality (es...Read more...

Journal article

Oxford Open Economics:

Labour market inequality

Wage and earnings inequality has been on the rise in the United Kingdom (UK) since the late 1970s/early 1980s, and with faster increases than comparator countries, it is now one of the countries with the highest levels o...Read more...

Blog

Vox EU:

The effect of productivity growth on within-firm inequality

Wage inequality has increased dramatically in the US since the 1970s, largely driven by within-firm earnings inequality. This column uses combined data from three large micro datasets to study the drivers and implication...Read more...

CEP discussion paper

The wage of temporary agency workers

Using French administrative data, we estimate the wage gap distribution between in-house and temporary agency workers working in the same establishment and the same occupation. The average wage gap is about 3%, but the g...Read more...

CEP election analysis

Work, wages and inactivity

The recent aggregate performance of the UK labour market looks good. But aggregate performance often obscures important changes around averages. Inequality along several dimensions remains a persistent feature of the UK ...Read more...

CentrePiece article

The national minimum wage: 25 years on

It is now just over a quarter of a century since a national minimum wage was introduced in the UK. Once a source of controversy due to fears that it would lead to fewer jobs, the policy has instead proved to be highly su...Read more...

CEP discussion paper

Land use regulation, homeownership and wealth inequality

We examine the role that housing market regulatory restrictiveness plays in differentially affecting the net wealth of owners and renters over time, and its contribution to wealth inequality. In tightly regulated desirab...Read more...

Journal article

Econometrica:

A Comment on: "Walras-Bowley Lecture: Market Power and Wage Inequality" by Shubhdeep Deb, Jan Eeckhout, Aseem Patel, and Lawrence Warren

A burgeoning literature in labor economics is focused on modeling employer labor market power, generally finding nontrivial estimates of monopsony power. A smaller literature also simultaneously incorporates product mark...Read more...

Journal article

Journal of Economic Behavior and Organization:

Where does money matter more?

There is much still to learn about the relationship between income and well-being, and in particular how this may depend on the economic and social context. We use Russian data to estimate individual Welfare Functions of...Read more...

Journal article

Journal of International Economics: Forthcoming

Are trade wars class wars? The importance of trade-induced horizontal inequality

What is the nature of the distributional effects of trade? This paper demonstrates conceptually and empirically the importance of “trade-induced horizontal inequality,” i.e. inequality that occurs among workers with the ...Read more...

External publication

A generation at risk: rebalancing education in the post-pandemic era

We present for the first time a model of children's evolving socio-emotional and cognitive skills to assess how the educational and lifetime prospects of children of different ages, genders and socio-economic backgrounds...Read more...

Blog

The Conversation:

How the national living wage helps the UK's poorest households: new research

The UK's national living wage has just been raised by 10% to £11.44 per hour. It is now payable for all workers aged 21 and over, where previously it was for those aged 23 and over. Introduced in 2016 as the flagship pol...Read more...

Blog

LSE British Politics and Policy:

The national minimum wage - 25 years on

This month marks 25 years since a national minimum wage was introduced in the UK. Once a controversial policy, due to fears that it would lead to fewer jobs, it has instead proven to be highly successful. The minimum wag...Read more...

Journal article

Journal of Labor Economics:

The Employment and Distributional Impacts of Nationwide Minimum Wage Changes

We estimate the effect of the introduction of the UK’s National Living Wage in 2016, and increases in it up to 2019, using a new empirical method. We apply a bunching approach to a setting with no geographical variation ...Read more...

Journal article

American Economic Journal: Applied Economics:

Measuring Absolute Income Mobility: Lessons from North America and Europe

We use linked parent-child administrative data for five countries in North America and Europe, as well as detailed survey data for two more, to investigate methodological challenges in the estimation of absolute income m...Read more...

CEP discussion paper

Are we yet sick of new technologies? The unequal health effects of digitalization

This study quantifies the relationship between workplace digitalization, i.e., the increasing use of frontier technologies, and workers' health outcomes using novel and representative German linked employer-employee data...Read more...

Journal article

Entrepreneurial Ecosystems in Cities and Regions: Emergence, Evolution, and Future:

Inclusive Entrepreneurial Ecosystems

Cities and regions with the strongest entrepreneurial ecosystems are often marked by high levels of inequality. These inequalities have, however, often been overlooked in policy and academic circles. Seeking to remedy th...Read more...

Journal article

LSE Public Policy Review:

Wage Controversies: Real Wage Stagnation, Inequality and Labour Market Institutions

Weak real wage growth, low wage work and higher wage inequality than the past are features of contemporary labour markets the world over. Longstanding wage controversies in economics are of relevance to them. This paper ...Read more...

CEP Insights

Insights: condensed

The Insights series is an introduction to the work of the Centre for Economic Performance (CEP). Each Insight highlights the contribution of CEP researchers to both academic understanding and policymaking in one area of ...Read more...

External publication

The state of the UK economy 2024

The state of the UK economy is always an important matter, but it is all the more so in what looks likely to be an election year. This UK in a Changing Europe report takes stock of the UK economy in order to assess how i...Read more...

Blog

Notes from Poland:

Six myths about inequality in Poland

Pawel Bukowski discusses and debunks some of the common misconceptions regarding inequality in Poland....Read more...

CEP discussion paper

Global managers, local workers: Wage setting inside a multinational firm

How are wages set within a multinational firm? Combining cross-country data on wages and labor regulations with personnel records of a large multinational firm, I find that wage setting depends on the rank of the employe...Read more...

Journal article

European Economic Review:

Remote talks: Changes to economics seminars during COVID-19

This paper analyzes the consequences of the change in the presentation mode of economics seminars triggered by the COVID-19 pandemic. The composition of seminar speakers changed significantly. The share of seminars held ...Read more...

CEP discussion paper

The changing nature of pollution, income and environmental inequality in the United States

This paper uses administrative tax records linked to Census demographic data and high-resolution measures of fine small particulate (PM2.5) exposure to study the evolution of the Black-White pollution exposure gap over t...Read more...

Blog

LSE British Politics and Policy:

Why household income doesn't tell the full story on individual wellbeing

The literature on inequality often focuses on household income, but this measure has several limitations for assessing individual wellbeing. Tim Obermeier develops a new collective household model which simultaneously ac...Read more...

CEP discussion paper

Income inequality in the 21st century Poland

This paper combines micro-level tax data, household surveys and national accounts data to provide consistent series of income distribution in Poland over the 2000-2018 period. We find that inequalities in Poland are one ...Read more...

CEP discussion paper

Individual welfare analysis: A tale of consumption, time use and preference heterogeneity

How accurately does household income reflect the well-being of the individuals living within the household? Looking at household income does not take unequal consumption sharing within families, the value of time use (le...Read more...

CEP discussion paper

The distributional effects of trade: Theory and evidence from the United States

How much do consumption patterns matter for the impact of international trade on inequality? In neoclassical trade models, the effects of trade shocks on consumers' purchasing power are governed by the shares of imports ...Read more...

Blog

Vox EU:

New evidence on spatial wage inequality across North America and Western Europe

Spatial inequality has become a key policy concern across much of the advanced world, prompting a spate of government action on the issue in recent years. This column presents evidence showing that, contrary to the popul...Read more...

Journal article

Journal of Economic Perspectives:

The Evolution of Work from Home

Full days worked at home account for 28 percent of paid workdays among Americans 20–64 years old, as of mid-2023. That's about four times the 2019 rate and ten times the rate in the mid-1990s. We first explain why the bi...Read more...

Journal article

Annual Review of Economics:

Labor Market Insurance Policies in the Twenty-First Century

The COVID-19 crisis was a stress test for unemployment insurance schemes as it involved a sudden and unexpected shutdown of a very large set of activities. This forced countries to introduce, often from scratch, income s...Read more...

Journal article

Journal of Economic Geography:

Left-behind versus unequal places: interpersonal inequality, economic decline and the rise of populism in the USA and Europe

Economic change over the past 20 years has rendered many individuals and territories vulnerable, leading to greater interpersonal and interterritorial inequality. This rising inequality is seen as a root cause of populis...Read more...

Blog

IFS Zooms In:

Are differences between companies driving inequality and holding back growth? (podcast)

What do we mean when we talk about inequality between firms? Are inequalities between firms limiting UK business dynamism? And do governments need to step in and enforce competition rules? In this podcast episode, John V...Read more...

Blog

What Works Centre for Local Economic Growth:

What are spatial disparities?

Henry Overman explains what spatial disparities are, why we need to consider them when thinking about local economic growth policies and whether we should try to reduce them....Read more...

CEP discussion paper

Spatial wage inequality in North America and Western Europe: changes between and within local labour markets 1975-2019

The rise of economic inequalities in advanced economies has been often linked with the growth of spatial inequalities within countries, yet there is limited comparative research that studies the relationship between nati...Read more...

CEP Insights

Social mobility

How much of an individual's success depends on their own hard work and how much on what their parents do for a living? A country where children from poor families are likely to be poor as adults and elite positions in so...Read more...

CEP discussion paper

The dynamics of the 'Great Gatsby Curve' and a look at the curve during the Great Gatsby era

We use linked historical US censuses to study the empirical relationship between inequality and intergenerational mobility. We first confirm that the 'Great Gatsby Curve' already existed in the early 20th century. We the...Read more...

CEP discussion paper

The shift to remote work lessens wage-growth pressure

The recent shift to remote work raised the amenity value of employment. As compensation adjusts to share the amenity-value gains with employers, wage-growth pressures moderate. We find empirical support for this mechanis...Read more...

CEP discussion paper

Are trade wars class wars? The importance of trade-induced horizontal inequality

What is the nature of the distributional effects of trade? This paper demonstrates conceptually and empirically the importance of "trade-induced horizontal inequality," i.e., inequality brought about by trade shocks that...Read more...

CEP discussion paper

Responsible sourcing? Theory and evidence from Costa Rica

Multinational enterprises (MNEs) increasingly impose "Responsible Sourcing" (RS) standards on their suppliers worldwide, including requirements on worker compensation, benefits and working conditions. Are these policies ...Read more...

CEP discussion paper

Robot adoption, worker-firm sorting and wage inequality: evidence from administrative panel data

Leveraging the geographic dimension of a large administrative panel on employer-employee contracts, we study the impact of robot adoption on wage inequality through changes in worker-firm assortativity. Using recently de...Read more...

Submission to a parliamentary inquiry and government consultation

Business, Energy and Industrial Strategy Committee - UK plc 2050 (non-inquiry session)

The session examines what policies could restore competitiveness and address the country's intractable productivity and regional inequality problems while also reaching net zero....Read more...

Journal article

Regional Studies: Forthcoming

Level best? The levelling up agenda and UK regional inequality

'Levelling up' - a policy agenda focused on reducing regional inequalities - has become the new mantra in British politics. This paper critiques the policy programme from its emergence in 2019 to the publication of the 2...Read more...

Blog

The Conversation:

Pay inequality is high in South Africa: bosses are part of the problem

South Africa is one of the most unequal countries in the world. This income inequality is mostly due to high unemployment and large differences in wages. In South Africa today, economists and policy-makers typically foc...Read more...

Journal article

Review of Income and Wealth :

The well-being cost of inflation inequalities

In terms of well-being, how costly is inflation? To answer this question, empirical evaluations have typically studied average inflation rates at the national level, thus disregarding the role of inflation inequalities w...Read more...

Blog

Vox EU:

Unequal education and the 'Great Gatsby Curve'

In modern economies, people's livelihoods are based in large part on skills acquired through education. Unequal education therefore drives both inequality in the labour market and low social mobility across generations. ...Read more...

CEP discussion paper

Defying distance? The provision of services in the digital age

Digital platforms are transforming services by making the physical distance between provider and user less relevant. I quantify the potential gains this flexibility offers in the context of digital primary care in Sweden...Read more...

Journal article

Quantitative Economics:

Income dynamics in the United Kingdom and the impact of the Covid-19 recession

In this paper, we use an employer-based survey of earnings and hours to set out the key patterns in UK earnings dynamics from 1975 to 2020, with a particular focus on the most recent recession. We demonstrate that (log) ...Read more...

Journal article

Fiscal Studies:

The gendered division of paid and domestic work under lockdown

This paper provides novel empirical evidence on the effects of the COVID-19 pandemic on the division of labour between parents of school-aged children in two-parent opposite-gender families. In line with existing evidenc...Read more...

CEP discussion paper

Who's got the power? Wage determination and its resilience in the Great Recession

Whereas wage inequality has risen markedly in most OECD countries in recent decades, it has fallen in several Southern European economies. To shed light on this phenomenon, we embed sectoral bargaining, which is common i...Read more...

CEP discussion paper

The wage elasticity of recruitment

One of the factors affecting the market power of employers is the extent to which higher wages makes recruitment easier. There is very little research on this. This paper presents a methodology for estimating the wage el...Read more...

CentrePiece article

The impact of school closures on educational inequality

Nearly all schools closed at some point during the Covid-19 pandemic. Reviewing the international evidence to date on the impact of these closures, Jo Blanden, Matthias Doepke and Jan Stuhler warn that they will substant...Read more...

CentrePiece article

Stagnation nation

Even before the cost of living crisis, a toxic combination of slow growth and high inequality was threatening UK living standards, particularly for families on low and middle incomes. The Economy 2030 Inquiry is examinin...Read more...

CentrePiece article

Policies for affordable housing: options and obstacles

The crisis of housing affordability has been mounting for decades, driven by growing demand for properties in desirable areas where supply is limited. Numerous policies have been enacted across countries, but many are in...Read more...

Journal article

Oxford Review of Education : Forthcoming

Inequalities in late adolescents' educational experiences and wellbeing during the Covid-19 pandemic

While the health risks of Covid-19 for young people are low, they have borne a heavy cost of the pandemic through intense disruption to their education and social lives. These effects have not been experienced equally ac...Read more...

CEP discussion paper

Labor market insurance policies in the XXI century

The recovery from the Covid-19 crisis will force governments to accelerate transformation in their menu of labor market policy tools. The crisis was a stress test for unemployment insurance schemes as it involved a sudde...Read more...

CEP discussion paper

Firms and inequality when unemployment is high

How important are firms for wage inequality in developing countries where structural unemployment is high? Research focused on contexts close to full employment has suggested a substantial role of firms in labor market i...Read more...

CEP discussion paper

The well-being cost of inflation inequalities

In terms of well-being, how costly is inflation? To answer this question, empirical evaluations have typically studied average inflation rates at the national level, thus disregarding the role of inflation inequalities w...Read more...

CEP discussion paper

Company wage policy in a low-wage labor market

The question of how firms set wages for their employees has been of longstanding interest. In this paper, we investigate what models of wage determination are at play in a low-wage labor market. We exploit a sizable and ...Read more...

Journal article

Journal of Human Resources :

Workplace presenteeism, job substitutability and gender inequality

This paper explores how the parenthood wage penalty is partially explained by an increased within-couple gap in job uniqueness (i.e., the within-establishment substitutability of workers). Uniqueness is rewarded with hig...Read more...

Blog

Economics Observatory:

Minimum wages and living wages: what happens in times of inflation?

It is widely accepted that minimum wages are an effective way to help workers at the lower end of the income distribution without damaging their job opportunities. But while the UK's minimum wage has risen faster than th...Read more...

External publication

Education Inequalities

Education is one of the most important predictors of people's life chances. Better-educated people are more likely to be in work and tend to earn more, and the influence of education does not stop there. Education shapes...Read more...

External publication

Stagnation nation: navigating a route to a fairer and more prosperous Britain

The UK has great strengths, but is over a decade into a period of stagnation. The toxic combination of slow growth and high inequality was posing challenges for low-to-middle income Britain's living standards even before...Read more...

Blog

VoxTalks Economics:

Levelling up Europe's left-behind places (podcast)

Recorded live at CEPR Paris Symposium 2022: Inequality isn't just between individuals, but between regions too. Henry Overman explains to Tim Phillips why these disparities exist, why they are so persistent, and whether ...Read more...

Blog

LSE Business Review:

Low pay and insecurity in the UK labour market

Minimum wage increases have driven down the incidence of low hourly pay, but there has been much less progress elsewhere for low earners. Low pay is widespread among the self-employed, who do not benefit from the minimum...Read more...

Journal article

Mothers in the Labor Market:

Temporal flexibility, breaks at work, and the motherhood wage gap

We analyze the relationship between temporal flexibility at work (i.e., the ability to vary or change the time of beginning or ending work) and the motherhood wage gap of working parents, in the US. To that end, we first...Read more...

Chapter

Temporal flexibility, breaks at work, and the motherhood wage gap

in Mothers in the labor market

We analyze the relationship between temporal flexibility at work (i.e., the ability to vary or change the time of beginning or ending work) and the motherhood wage gap of working parents, in the US. To that end, we first...Read more...

CEP occasional paper

Housing policy and affordable housing

Lack of affordable housing is a growing and often primary policy concern in cities around the world. The main underlying cause for the 'affordability crisis', which has been mounting for decades, is a combination of stro...Read more...

CVER Research Paper

Variation in Parenthood Wage Effect: A human capital approach

Using German Socio-Economic Panel (GSOEP) microdata this paper contributes new empirical evidence by examining the implications of motherhood and fatherhood for wages of a sample of women and men between 2005-2015. Makin...Read more...

CEP discussion paper

Education inequality

This paper provides new evidence on educational inequality and reviews the literature on the causes and consequences of unequal education. We document large achievement gaps between children from different socio-economic...Read more...

Journal article

Labour Economics:

Residential mobility and unemployment in the UK

The UK has suffered from persistent spatial differences in unemployment rates for many decades. A low responsiveness of internal migration to unemployment is often argued to be an important cause of this problem. This pa...Read more...

Journal article

Journal of Human Resources:

The urban wage premium in imperfect labor markets

Using administrative data for West Germany, this paper investigates whether part of the urban wage premium stems from fierce competition in thick labour markets. We first establish that employers possess less wage-settin...Read more...

CEP Insights

Jobs and wages

Most working-age adults depend on earnings from jobs as their main source of income. Understanding the labour market has always been a central part of research at CEP and its predecessor the Centre for Labour Economics....Read more...

CEP Insights

Wellbeing

As societies become richer, they do not become happier. This paradox has led to a growing interest in the science of wellbeing, and how policymakers can evaluate policies in terms of what will improve wellbeing. Economis...Read more...

CEP discussion paper

Firms and inequality

In the last few decades, dramatic changes have been documented in the US business landscape. These include rising productivity and pay dispersion between firms, higher aggregate markups (of price over variable costs), gr...Read more...

External publication

Innovation and inequalities

Innovation can affect inequalities in many ways - increasing some inequalities and decreasing others. An innovation can introduce a new good, improve the quality of existing goods, or lead to new ways of doing things. It...Read more...

External publication

Firms and inequalities

There have been some dramatic changes in the business landscape in American firms over the last four decades that have been extensively documented by researchers and are the subject of much public debate (e.g. Van Reenen...Read more...

Journal article

Journal of Economic History:

The long shadow of slavery: The persistence of slave owners in southern lawmaking

This paper documents the persistence of Southern slave owners in political power after the American Civil War. Using data from Texas, we show that former slave owners made up more than half of all state legislators until...Read more...

CentrePiece article

In brief... How Pelé changed Brazilian football

A ban on non-compete agreements in Brazilian football led to an increased lifetime income for players. But as research by Bernardo Guimaraes, João Paulo Pessoa and Vladimir Ponczek reveals, it was older players who gaine...Read more...

CentrePiece article

What lottery wins reveal about the gender gap

The UK has seen a rapid increase in self-employed workers over the last two decades, but only one-third are women. Sarah Flèche and colleagues analyse data on lottery winners to show that improving women's access to capi...Read more...

Journal article

Journal of Economic Inequality : Forthcoming

Correction to: the fall in income inequality during Covid-19 in four European countries (The Journal of Economic Inequality, (2021)

The original version of this article was published online with missing legends and notes in the Figs. 1,2,3,4 and 5. ...Read more...

Blog

LSE Business Review:

What is the optimal minimum wage?

With reports from the European Commission, the UK Treasury advocating significant increases in minimum wage levels, Gabriel Ahlfeldt, Duncan Roth, and Tobias Seidel explore whether such ambitious minimum wage increases i...Read more...

CEP discussion paper

Optimal minimum wages

We develop a quantitative spatial model with heterogeneous firms and a monopsonistic labour market to derive minimum wages that maximize employment or welfare. Quantifying the model for German micro regions, we find that...Read more...

Blog

VoxEU:

Fair and inclusive markets: why fostering dynamism matters

Philippe Aghion, Reda Cherif and Fuad Hasanov explain how economic dynamism is crucial for achieving inclusive growth and shared prosperity....Read more...

Blog

VoxEU:

The value of online gig economy platforms

The gig economy and online labour platforms often trade off increased flexibility for lower employment security. Christopher Stanton and Catherine Thomas show how traditional labour market regulations, such as minimum wa...Read more...

Journal article

Journal of Econometrics: Forthcoming

Union membership density and wages: the role of worker, firm, and job-title heterogeneity

We examine the association between union density and wages in Portugal where just 10 percent of all workers are union members but nine-tenths of them are covered by collective agreements. Using a unique dataset on worker...Read more...

Journal article

Health and Place:

Income-related health inequality in urban China (1991-2015): the role of homeownership and housing conditions

Unprecedented economic growth has been experienced over the several decades worldwide, but such rapid economic growth wasn't accompanied by equally-substantial improvement in health, especially health inequalities betwee...Read more...

CentrePiece article

Rising sea levels and the future of coastal cities

Despite the higher susceptibility to floods and a growing climate crisis, more than 10% of the world's population lives in low-elevation coastal zones - and that share is increasing. Guy Michaels and colleagues present a...Read more...

Journal article

SERIEs: Forthcoming

Work and children in Spain: challenges and opportunities for equality between men and women

Over the past decades, Spain has seen a striking convergence between women’s and men’s participation in the labour market. However, this convergence has stalled since the early 2010s. We show that women still fare worse ...Read more...

Journal article

Journal of Economic Inequality:

The fall in income inequality during COVID-19 in four European countries

We here use panel data from the COME-HERE survey to track income inequality during COVID-19 in France, Germany, Italy, and Spain. Relative inequality in equivalent household disposable income among individuals changed in...Read more...

CEP Insights

Gender in the workplace

The influx of women into the workplace during the 20th century has been one of the most remarkable changes in the world of work. But in general, women are less likely to be employed than men, they are less likely to hold...Read more...

Journal article

Journal of Economic Behavior and Organization:

The importance of capital in closing the entrepreneurial gender gap: A longitudinal study of lottery wins

Would improving women's access to capital reduce the gender entrepreneurial gap? We study this issue by exploiting longitudinal data on lottery winners. Comparing between large to small winners, we find that an increase ...Read more...

Journal article

Annual Review of Economics:

Inflation Inequality: Measurement, Causes, and Policy Implications

Does inflation vary across the income distribution? This article reviews the growing literature on inflation inequality, describing recent advances and opportunities for further research in four areas. First, new price i...Read more...

Journal article

Journal of Economic Growth:

Between communism and capitalism: long-term inequality in Poland, 1892–2015

We construct the first consistent series on the long-term distribution of income in Poland by combining tax, household survey and national accounts data. We document a U-shaped evolution of inequalities from the end of t...Read more...

Book

The Power of Creative Destruction
Economic Upheaval and the Wealth of Nations

Crisis seems to follow crisis. Inequality is rising, growth is stagnant, the environment is suffering, and the Covid-19 pandemic has exposed every crack in the system. We hear more and more calls for radical change, even...Read more...

CEP discussion paper

The importance of capital in closing the entrepreneurial gender gap: a longitudinal study of lottery wins

Can capital constraints explain why there are more male than female entrepreneurs in most societies? We study this issue by exploiting longitudinal data on lottery winners. Comparing between large to small winners, we fi...Read more...

Journal article

Personality and Social Psychology Bulletin:

Inequality and Social Rank: Income Increases Buy More Life Satisfaction in More Equal Countries

How do income and income inequality combine to influence subjective well-being? We examined the relation between income and life satisfaction in different societies, and found large effects of income inequality within a ...Read more...

CEP discussion paper

Non-compete agreements, wages and efficiency: theory and evidence from Brazilian football

We propose a model to study non-compete agreements and evaluate their quantitative effects. We explore an exogenous policy change that removed non-compete clauses in the market for Brazilian footballers, the Pele Act of ...Read more...

CentrePiece article

In brief... The long shadow of slavery

The politics and economy of the antebellum American South were dominated by those who practiced forced enslavement. Research by Luna Bellani, Anselm Hager and Stephan Maurer, which examines a database of Texas legislator...Read more...

CEP discussion paper

The true returns to the choice of occupation and education

Which occupations are best for wellbeing? There is a large literature on earnings differentials, but less attention has been paid to occupational differences in non-pecuniary rewards. However, information on both types o...Read more...

Journal article

Canadian Journal of Economics:

On the interpretation of diploma wage effects estimated by regression discontinuity designs

Several recent papers employ regression discontinuity (RD) designs to estimate the causal effect of a diploma or similar credentials on wages. I build a model of knowledge acquisition, test-taking and labour market caree...Read more...

Blog

LSE Covid-19:

Further school closures mean bleak prospects for the young

Further closures of schools, while necessary to contain the spread of COVID-19, are likely to exacerbate educational inequalities. Learning losses could have long-term consequences for the life chances of children from d...Read more...

Journal article

B.E. Journal of Economic Analysis and Policy:

Charging for Higher Education: Estimating the Impact on Inequality and Student Outcomes

Over the last two decades, undergraduate university education in England moved from being state-funded and free for students, to costing all students substantial amounts in tuition fees. In this paper, using detailed adm...Read more...

Journal article

Journal of Economic Perspectives:

The elusive employment effect of the minimum wage

Vacant, previously-developed land in cities can generate negative externalities on surrounding areas, and is often the target of policies to promote re-development. This paper provides estimates of the price sensitivity ...Read more...

Blog

LSE British Politics and Policy:

Schools and England's second lockdown: further closures would have adverse effects on children and a wider effect on family life

Sandra McNally and Jo Blanden explain how school closures have negative effects on both children and parents, hindering educational outcomes, mental health, work, and general resilience....Read more...

Blog

LSE British Politics and Policy:

Covid-19 and social mobility: the public support key policies that will help limit widening inequalities in employment and education

Lee Elliot Major, Andrew Eyles, and Stephen Machin present new data around public support behind the implementation of job guarantees, the reform of A-level and GCSE exams in 2021, and the abolition of predicted grades f...Read more...

Blog

LSE British Politics and Policy:

Transport infrastructure expenditure: while there is no strong evidence of significant regional differences, the data available is problematic

The UK government uses a Value for Money framework to help allocate infrastructure expenditure. At the core of this is a benefit-to-cost ratio (BCR), calculated using a set of established monetised impacts and costs. Yet...Read more...

Blog

LSE Covid-19:

City of dreams no more: Covid-19 in urban India

COVID-19 has decimated livelihoods in urban India and created a new underclass of workers who are being pushed into poverty. Shania Bhalotia, Swati Dhingra and Fjolla Kondirolli (LSE) say a national work guarantee is nee...Read more...

CEP discussion paper

The long shadow of slavery: the persistence of slave owners in Southern law-making

This paper documents the persistence of the Southern slave owning elite in political power after the end of the American Civil War. We draw on a database of Texan state legislators between 1860 and 1900 and link them to ...Read more...

CEP discussion paper

Better together? Heterogeneous effects of tracking on student achievement

I study the effects of early between-school ability tracking on student achievement, exploiting institutional differences between German federal states. In all states, about 40% of students transition to separate academi...Read more...

CEP discussion paper

Dream jobs

Understanding why certain jobs are ‘better’ than others and what implications they have for a worker’s career is clearly an important but still relatively unexplored question. We provide both a theoretical framework and ...Read more...

Journal article

Regional Science and Urban Economics:

The effects of supporting local business: evidence from the UK

This paper assesses the effects of a significant place-based intervention that targeted local businesses in deprived areas in the UK. To gain identification, we use data at a fine spatial scale and a regression discontin...Read more...

Journal article

Journal of Economic Perspectives:

Place-based policies and spatial disparities across European cities

Spatial disparities in income and worklessness across areas of the European Union are profound and persistent. Concerns about these disparities and the appropriate policy response are longstanding. Two trends have re-ene...Read more...

CEP discussion paper

Automation, globalization and vanishing jobs: a labor market sorting view

We show, theoretically and empirically, that the effects of technological change associated with automation and offshoring on the labor market can substantially deviate from standard neoclassical conclusions when search ...Read more...

CEP discussion paper

Damned by dams? Infrastructure and conflict

This study investigates the impact of dams on local conflict across the world with georeferenced location information on dams and conflict events for the years 1989 to 2016. The identification strategy exploits exogenous...Read more...

Blog

LSE Business Review:

Covid-19 is increasing the divide in life chances between rich and poor

Covid-19 is increasing the divide in life chances between rich and poor Lee Elliot Major and Stephen Machin propose reforms and urgent actions to tackle economic and educational inequalities in the UK....Read more...

Blog

VoxEU:

How the UK government should respond to the unequal local economic impacts of Covid-19

The economic crisis caused by COVID-19 will play out unequally across areas. Unfortunately, the unusual nature of this crisis makes its local impacts hard to predict. This complicates attempts to formulate appropriate ar...Read more...

Blog

VoxEU:

Prepare for large wage cuts if you are younger and work in a small firm

The COVID-19 pandemic is turning into a global recession - probably the biggest drop in economic activity since the Great Depression of the 1930s. This column uses over 3 million earnings observations drawn from more tha...Read more...

CentrePiece article

TV superstars: how a new technology disrupted the entertainment industry

The rollout of television to virtually every household in the United States in the mid-twentieth century created a potentially huge audience for people working in the entertainment industry. As Felix Koenig explains, thi...Read more...

CEP discussion paper

Automating labor: evidence from firm-level patent data

Do higher wages lead to more automation innovation? To answer this question, we first introduce a new measure of automation by using the frequency of certain keywords in patent text to identify automation innovations in ...Read more...

CEP discussion paper

The innovation premium to soft skills in low-skilled occupations

Matched employee-employer data from the UK are used to analyze the wage premium to working in an innovative firm. We find that firms that are more R&D intensive pay higher wages on average, and this is particularly true ...Read more...

CEP discussion paper

The motivational cost of inequality: pay gaps reduce the willingness to pursue rewards

Factors beyond a person?s control, such as demographic characteristics at birth, often influence the availability of rewards an individual can expect for their efforts. We know surprisingly little how such pay-gaps due t...Read more...

CVER Briefing Note

Inequality in education and labour market participation of young people across English localities:An exploration based on Longitudinal Education Outcomes (LEO) data

Currently, 792,000 16-24-year olds in the UK – 11.5% of the age group – are Not in Education, Employment or Training (NEET), but not much is known about how this differs by local area. In this Briefing Note, we provide c...Read more...

CEP election analysis

Social mobility

Debates over how to improve life prospects for people irrespective of their family background promise to be a key theme in the run-up to the 2019 General Election. This briefing summarises evidence on social mobility fro...Read more...

CEP discussion paper

Technical change and superstar effects: evidence from the roll-out of television

Technical change that improves economies of scale can generate fast income growth among top earners at the expense of everyone else. I test this classic “superstar model” in the labor market for entertainers where the hi...Read more...

CentrePiece article

Generation gap: young Brits less likely to 'do better' than their parents

Doing better financially than your parents is an important marker of success, and for much of the last half century, real earnings growth in the UK was strong enough that most young people achieved this milestone. But re...Read more...

CentrePiece article

Between communism and capitalism: long-run inequality in Poland

How has inequality in Poland evolved between communism and capitalism to reach one of the highest levels in Europe today? Pawel Bukowski and Filip Novokmet chart a century of data on Polish inequality, 1892-2015, to exam...Read more...

CentrePiece article

When machines replace people: individual consequences of occupational decline

What happens to people's careers when demand for their occupations declines, often as a result of technological change? Guy Michaels and colleagues' analysis of detailed occupational data on Swedish workers over several ...Read more...

Journal article

The Journal of Human Resources:

Speech and Wages

Although language has been widely studied, relatively little is known about how a worker's speech, in his/her native tongue, is related to wages, or what explains the observed relationship. To address these questions, I ...Read more...

CVER Research Paper

Socio-economic inequality and academic match among post-compulsory education participants

The study investigates the impact of socioeconomic background on the academic match of students in post-compulsory upper-secondary education making use of detailed individual-level linked administrative data from schools...Read more...

CEP discussion paper

Understanding day care enrolment gaps

We document day care enrolment gaps by family background in a country with a universal day care system (Germany). Research demonstrates that children of less educated or foreign-born parents can benefit the most from day...Read more...

Journal article

Economics of Education Review:

The end of free college in England: Implications for enrolments, equity, and quality

Despite increasing financial pressures on higher education systems throughout the world, many governments remain resolutely opposed to the introduction of tuition fees, and some countries and states where tuition fees ha...Read more...

CEP discussion paper

Residential mobility and unemployment in the UK

The UK has suffered from persistent spatial differences in unemployment rates for many decades. A low responsiveness of internal migration to unemployment is often argued to be an important cause of this problem. This pa...Read more...

CentrePiece article

Trade and deskilling: how the post-referendum sterling depreciation hurt workers

The unexpected result of the Brexit referendum, working through the rapid depreciation of sterling, had a sizable negative impact on UK workers. New CEP work by Rui Costa, Swati Dhingra and Stephen Machin shows that the ...Read more...

Journal article

Economic Policy:

Zero Hours Contracts and Labour Market Policy

The evolving nature of atypical work arrangements is studied. A particular focus is placed on one such form of work relation: zero hour contracts (ZHCs). The paper uses existing secondary data and new survey data collect...Read more...

CEP discussion paper

Individual consequences of occupational decline

What are the earnings and employment losses that workers suffer when demand for their occupations declines? To answer this question we combine forecasts on occupational employment changes, which allow us to identify unan...Read more...

CEP discussion paper

Between communism and capitalism: long-term inequality in Poland, 1892-2015

How has Polish inequality evolved between communism and capitalism to reach one of the highest levels in Europe today? To address this question, we construct the first series on the long-term distribution of income in Po...Read more...

CEP discussion paper

Technology gaps, trade and income

This paper studies the origins and consequences of international technology gaps. I develop an endogenous growth model where R&D efficiency varies across countries and productivity differences emerge from firm-level tech...Read more...

CEP discussion paper

Commuting, migration and local joblessness

Britain suffers from persistent spatial disparities in employment rates. This paper develops an integrated framework for analyzing two forces expected to equalize economic opportunity across areas: commuting and migratio...Read more...

Journal article

IZA Journal of Labor Economics:

Reallocation and the Role of Firm Composition Effects on Aggregate Wage Dynamics

Aggregate wages display little cyclicality compared to what a standard model would predict. Wage rigidities are an obvious candidate, but the existing literature has emphasized the need to take into account the growing i...Read more...

CEP discussion paper

The urban wage premium in imperfect labour markets

Using administrative data for West Germany, this paper investigates whether part of the urban wage premium stems from fierce competition in thick labour markets. We first establish that employers possess less wage-settin...Read more...

Journal article

The Quarterly Journal of Economics:

Firming up inequality

We use a massive,matched employer-employee database for the United States to analyze the contribution of firms to the rise in earnings inequality from 1978 to 2013. We find that one-third of the rise in the variance of (...Read more...

Journal article

IZA World of Labor:

Intergenerational income persistence

A strong association between incomes across generations—with children from poor families likely to be poor as adults—is frequently considered an indicator of insufficient equality of opportunity. Studies of such “interge...Read more...

CentrePiece article

Social mobility and its enemies

Increasingly it seems that the rich and poor of Britain are destined to stay on the same rungs of the economic or social ladder for successive generations. A new book by Lee Elliot Major and Stephen Machin calls for an a...Read more...

Journal article

Economics Letters:

The regional effects of Germany's national minimum wage

We show that the minimum wage introduced in Germany in 2015 led to spatial wage convergence, in particular in the left tail of the distribution, without reducing relative employment in low-wage regions within the first t...Read more...

Journal article

Journal of the European Economic Association:

Firm dynamics and residual inequality in open economies

Wage inequality between similar workers has been on the rise in many rich countries. Recent empirical research suggests that heterogeneity in firm characteristics is crucial to understand wage dispersion. Lower trade cos...Read more...

CEP discussion paper

The economic impacts of constraining home investments

We investigate how political backlash against wealthy investors in high-amenity places affects local residents. We exploit a quasi-natural experiment: the ‘Swiss Second Home Initiative’, which banned the construction of ...Read more...

Journal article

Economica:

Wage Flexibility and Employment Fluctuations: Evidence from the Housing Sector

Many economists suspect that downward nominal wage rigidities in ongoing labour contracts are an important source of employment fluctuations over the business cycle, but there is little direct empirical evidence on this ...Read more...

CentrePiece article

Care homes: effects of the National Living Wage

The National Living Wage, which was introduced in 2016, has substantially raised wages at the bottom of the hourly wage distribution in care homes in England, a sector that employs a large number of low-paid workers. Acc...Read more...

Journal article

AEA Papers and Proceedings:

Gender Norms and Relative Working Hours: Why Do Women Suffer More Than Men from Working Longer Hours Than Their Partners?

Constraints that prevent women from working longer hours are argued to be important drivers of the gender wage gap in the United States. We provide evidence that in couples where the wife's working hours exceed the husba...Read more...

CEP discussion paper

Specialization matters in the firm size-wage gap

This study applies the O-ring theory to explain the firm-size wage premium. It focuses on the joint role of the division of labor and employee characteristics. Including the firm heterogeneity of occupations in a standar...Read more...

CEP discussion paper

Changing the structure of minimum wages: firm adjustment and wage spillovers

This paper analyses the economic impact of a significant change to the structure of a minimum wage setting policy. The context is the United Kingdom where government mandated an unexpected change in the structure of mini...Read more...

Journal article

Journal of International Economics:

Working across time zones: Exporters and the gender wage gap

This study argues that there is a systematic difference in the gender wage gap (GWG) between exporting firms and non-exporters. Exporters may require greater commitment from their employees, such as working particular ho...Read more...

CEP discussion paper

The effect of minimum wages on low-wage jobs: evidence from the United States using a bunching estimator

We propose a novel method that infers the employment effect of a minimum wage increase by comparing the number of excess jobs paying at or slightly above the new minimum wage to the missing jobs paying below it. Using st...Read more...

Journal article

Journal of Labor Economics:

Minimum wages and firm value

How does the value of a firm change in response to a minimum wage hike? The evidence we have to date is not well-suited to answer this question, principally because events that have been studied are not completely unknow...Read more...

Journal article

Economics of Education Review:

A question of degree: The effects of degree class on labor market outcomes

How does performance at university affect labor market outcomes? Employing a regression discontinuity design, we show that university degree class causally affects graduates’ industry, wages, and earnings. Our sample c...Read more...

CVER Research Paper

The Payoff to Vocational Qualifications: Reconciling Estimates from Survey and Administrative Data

This paper takes as a starting point the wage/earnings differentials associated with vocational qualifications that have been estimated in the literature. Two distinct parts of that literature are identified, using surve...Read more...

CEP discussion paper

The end of free college in England: implications for quality, enrolments and equity

Despite increasing financial pressures on higher education systems throughout the world, many governments remain resolutely opposed to the introduction of tuition fees, and some countries and states where tuition fees ha...Read more...

Journal article

Labour Economics:

Top earnings inequality and the gender pay gap: Canada, Sweden, and the United Kingdom

This paper explores the consequences of the under-representation of women in top jobs for the overall gender pay gap. Using administrative annual earnings data from Canada, Sweden, and the United Kingdom, it applies the ...Read more...

Journal article

Journal of Economic Psychology:

Top incomes and human well-being: Evidence from the Gallup World Poll

The share of income held by the top 1 percent in many countries around the world has been rising persistently over the last 30 years. But we continue to know little about the relationship between the rising top income sh...Read more...

Journal article

International Review of Economics:

Happiness, income and poverty

There is considerable evidence from a variety of sources to suggest that well-being is a function of relative income. These findings have been used to explain the Easterlin Paradox, whereby a rise in income for all does ...Read more...

Blog

ESRC blog:

How English care homes have coped with the National Living Wage

Giulia Giupponi is an ESRC-funded PhD student at the London School of Economics and a research assistant at the Centre for Economic Performance. Stephen Machin is Professor of Economics at the London School of Economics ...Read more...

Journal article

Economica:

Gender Inequality and Economic Development: Fertility, Education and Norms

We document the evolution of gender inequality in labour market outcomes—earnings, labour supply and wage rates—over the path of economic development, and present evidence on the potential reasons for this evolution. To ...Read more...

CentrePiece article

Superstar houses and the American mortgage frenzy

Clement Bellet shows how visible wealth inequality fuelled the US mortgage boom that preceded the financial crisis....Read more...

CEP discussion paper

The paradox of the Joneses: superstar houses and mortgage frenzy in suburban America

Despite a major upscaling of suburban houses over the last decades, house satisfaction has remained steady in the United States. I show that upward comparison in size can explain this paradox, as top housing size mirrore...Read more...

Journal article

The Review of Economic Studies:

Trade and inequality: From theory to estimation

While neoclassical theory emphasizes the impact of trade on wage inequality between occupations and sectors, more recent theories of firm heterogeneity point to the impact of trade on wage dispersion within occupations a...Read more...

Journal article

IZA Journal of Labor Policy:

Wage rigidities and business cycle fluctuations: A linked employer-employee analysis

This paper analyses wage dynamics in Italy in the last 25 years with a special focus on the recent recession. Despite the rather rigid Italian institutional setting, using linked employer-employee data we find that wage ...Read more...

Journal article

Health Economics (United Kingdom):

On a Family of Achievement and Shortfall Inequality Indices

This paper identifies a family of absolute consistent inequality indices using a weakly decomposable postulate suggested by Ebert. Because one member employs an Atkinson type aggregation we refer to it as the Atkinson in...Read more...

Journal article

The Review of Income and Wealth:

Economic Growth Evens Out Happiness: Evidence from Six Surveys

In spite of the great U-turn that saw income inequality rise in Western countries in the 1980s, happiness inequality has fallen in countries that have experienced income growth (but not in those that did not). Modern gro...Read more...

SERC/Urban and Spatial Programme Discussion Paper

The Housing Market Impacts of Constraining Second Home Investments

We investigate how political backlash against wealthy second home investors in high-amenity places – tourist areas or superstar cities – affects local residents. We develop a general equilibrium model and exploit a quasi...Read more...

CEP discussion paper

Wage flexibility and employment fluctuations: evidence from the housing sector

Many economists suspect that downward nominal wage rigidities in ongoing labor contracts are an important source of employment fluctuations over the business cycle but there is little direct empirical evidence on this co...Read more...

CEP discussion paper

The elusive employment effect of the minimum wage

There is a huge body of empirical research on the employment effect of the minimum wage that has failed to clearly demonstrate the negative effect that so many economists strongly believe to find. This paper reviews the ...Read more...

Journal article

Journal of Economic Theory:

Assignment reversals: Trade, skill allocation and wage inequality

The allocation of skilled labor across industries shapes inter-industry wage differences and wage inequality. This paper shows the ranking of industries by workforce skill differs between developed and developing countri...Read more...

Journal article

Oxford Economic Papers:

Graduate returns, degree class premia and higher education expansion in the UK

We investigate the extent to which graduate returns vary according to the class of degree achieved by UK university students, and examine changes over time in estimated degree class premia. Using a variety of complementa...Read more...

Journal article

Economica:

The Rising Postgraduate Wage Premium

Despite post-college degree holders now making up nearly 15% of the US adult workforce, studies of their labour market performance remain sparse. This is surprising given that they are the most educated group in the labo...Read more...

CEP discussion paper

Reservation wages and the wage flexibility puzzle

Wages are only mildly cyclical, implying that shocks to labour demand have a larger short-run impact on unemployment rather than wages, at odds with the quantitative predictions of the canonical search model – even if wa...Read more...

CEP real wages update

Slowing UK Wage Growth

We have previously examined the path of nominal and real wages in the UK (Blanchflower and Machin, 2014a, 2014b, 2014c). In that work, we expressed the view that in recent years there has been sufficient slack in the lab...Read more...

CEP discussion paper

Top incomes and human well-being around the world

The share of income held by the top 1 percent in many countries around the world has been rising persistently over the last 30 years. But we continue to know little about how the rising top income shares affect human wel...Read more...

Journal article

American Economic Journal: Applied Economics:

The contribution of the minimum wage to US wage inequality over three decades: A reassessment

We reassess the effect of minimum wages on US earnings inequality using additional decades of data and an IV strategy that addresses potential biases in prior work. We find that the minimum wage reduces inequality in the...Read more...

Journal article

The Economic Journal:

Income and Population Growth

Do populations grow as countries become richer? In this study we estimate the effects on population growth of shocks to national income that are plausibly exogenous and unlikely to be driven by technological change. For ...Read more...

CEP discussion paper

Globalization: a woman's best friend? Exporters and the gender wage gap

While the impact of globalization on income inequality has received a lot of attention, little is known about its effect on the gender wage gap (GWG). This study argues that there is a systematic difference in the GWG be...Read more...

CEP discussion paper

Firming up inequality

Earnings inequality in the United States has increased rapidly over the last three decades, but little is known about the role of firms in this trend. For example, how much of the rise in earnings inequality can be attri...Read more...

CEP election analysis

#ElectionEconomics: The Research Evidence on Key Issues for Voters in the 2015 UK General Election

Please see the CEP #ElectionEconomics report(Paper 1)and the Executive Summary (Paper 2) that cover all the election 2015 briefings, discussing the research evidence on 15 of the UK's key policy battlegrounds: immigratio...Read more...

CEP discussion paper

Has performance pay increased wage inequality in Britain?

Using data from the British Household Panel Survey (BHPS) we show performance pay (PP) increased earnings dispersion among men and women, and to a lesser extent among full-time working women, in the decade of economic gr...Read more...

CEP election analysis

Inequality: Are we really 'all in this together'?

The UK's top 1% have between 12.5% and 15.5% of all income. This is mid-way between the United States (20%) and Continental Europe (8%). This share has been rising steadily since the late 1970s, mainly due to labour inco...Read more...

CEP election analysis

Real Wages and Living Standards

Real wages and living standards have taken a hard hit in the UK in the recent past. Real wages of the typical (median) UK worker have fallen by almost 10% since 2008 and median family incomes have significantly fallen fo...Read more...

CEP discussion paper

Trust and racial income inequality: evidence from the US

Existing studies of trust formation in U.S. metropolitan areas have found that trust is lower when there is more income inequality and greater racial fragmentation. I add to this literature by examining the role of incom...Read more...

CEP discussion paper

Rise of the machines: the effects of labor-saving innovations on jobs and wages

How do firms respond to technological advances that facilitate the automation of tasks? Which tasks will they automate, and what types of worker will be replaced as a result? We present a model that distinguishes between...Read more...

CEP discussion paper

It's where you work: increases in earnings dispersion across establishments and individuals in the US

This paper links data on establishments and individuals to analyze the role of establishments in the increase in inequality that has become a central topic in economic analysis and policy debate. It decomposes changes in...Read more...

CEP occasional paper

Knowledge-based hierarchies: using organizations to understand the economy

We argue that incorporating the decision of how to organize the acquisition, use, and communication of knowledge into economic models is essential to understand a wide variety of economic phenomena. We survey the literat...Read more...

CEP discussion paper

Economic growth evens-out happiness: evidence from six surveys

In spite of the great U-turn that saw income inequality rise in Western countries in the 1980s, happiness inequality has fallen in countries that have experienced income growth (but not in those that did not). Modern gro...Read more...

CEP discussion paper

The volatility of earnings: evidence from high-frequency firm-level data

The first contribution of this paper is to use UK monthly firm-level data to show that there is a large amount of transitory volatility in firm-level average earnings from month to month. We conclude that this cannot all...Read more...

CentrePiece article

Falling real wages

The researchers note that there have been historically unprecedented falls in UK real wages since the start of the Great Recession. What’s more, the long US experience of stagnant real wages (median real weekly earnings ...Read more...

CentrePiece article

Minimum wages: the economics and the politics

The UK’s national minimum wage has tackled extreme low pay – but the wider problem of low pay remains as serious as ever. That is one of the conclusions of Professor Alan Manning in a discussion of the growing popularity...Read more...

Journal article

Review of Economics and Statistics:

Has ICT polarized skill demand? Evidence from eleven countries over twenty-five years

We test the hypothesis that information and communication technologies (ICT) polarize labor markets by increasing demand for the highly educated at the expense of the middle educated, with little effect on low-educated w...Read more...

CEP discussion paper

The political economy of inclusive rural growth

Abstract Commentators on the `East Asian Miracle' of inclusive growth have often pointed toward shared rural growth policies. But why were these policies not chosen elsewhere? This paper models voters who invest in eithe...Read more...

Journal article

The Economic Journal:

Bankers and their bonuses

We analyse the role of financial sector workers in the huge rise of the share of earnings going to those at the very top of the pay distribution in the UK. Rising bankers' bonuses accounted for two-thirds of the increase...Read more...

CEP discussion paper

Upward social mobility, well-being and political preferences: evidence from the BHPS

The paper uses 18 waves of BHPS data to provide evidence of the roles of both own social status and upward mobility relative to one's parents on job and life satisfaction, preferences for redistribution, pro-public secto...Read more...

CentrePiece article

Does school spending matter?

Increases in resources for schools are typically more effective in disadvantaged schools and for disadvantaged pupils. That is one of the many findings of a review by Steve Gibbons and Sandra McNally of the research evid...Read more...

CentrePiece article

Has job polarisation squeezed the American middle class?

Job polarisation has had strong effects on US workers’ relative wages, according to research by Michael Boehm. His study examines whether the decline in manufacturing and clerical jobs has been responsible for the laggin...Read more...

CentrePiece article

Lovely and lousy jobs

The phenomenon of ‘job polarisation’ is increasing inequality as the labour market splits into high- and low-wage work. According to Alan Manning, who coined the term a decade ago, we cannot ignore job polarisation – but...Read more...

SERC/Urban and Spatial Programme Discussion Paper

Cheap Imports and the Loss of U.S. Manufacturing Jobs

This paper examines the role of international trade, and specifically imports from low-wage countries, in determining patterns of job loss in U.S. manufacturing industries between 1992 and 2007. Motivated by intuitions f...Read more...

CEP discussion paper

Intergenerational persistence in income and social class: the impact of within-group inequality

Family income is found to be more closely related to sons’ earnings for a cohort born in 1970 compared to one born in 1958. This result is in stark contrast to the finding on the basis of social class; intergenerational ...Read more...

Journal article

Educational Research:

Educational attainment across the UK nations: performance, inequality and evidence

Political devolution occurred in the UK in 1998-99, following many years in which some degree of policy administration had been devolved to the four nations. Since devolution, all four countries of the UK have pursued in...Read more...

CEP discussion paper

The effects of resources across school phases: a summary of recent evidence

This report provides an overview and discussion of the past decade of academic evidence on the causal effects of resources in schooling on students’ outcomes. Early evidence lacked good strategies for estimating the effe...Read more...

CEP discussion paper

A question of degree: The effects of degree class on labor market outcomes

How does measured performance at university affect labor market outcomes? We show that degree class - a coarse measure of student performance used in the UK - causally affects graduates' industry and hence expected wages...Read more...

SERC/Urban and Spatial Programme Discussion Paper

The Urban Wage Growth Premium: Sorting or Learning?

This paper is concerned with the urban wage premium and addresses two central issues about which the field has not yet reached a consensus. First, the extent to which sorting of high ability individuals into urban areas ...Read more...

CEP discussion paper

Has job polarization squeezed the middle class? Evidence from the allocation of talents

Over the last two decades, earnings in the United States increased at the top and at the bottom of the wage distribution but not in the middle - the intensely debated middle class squeeze. At the same time there was a su...Read more...

CEP occasional paper

Bankers and their bonuses

The pay of financial sector workers (“bankers”) is a focus of public concern especially since the onset of the financial crisis. We document the remarkable rise in the share of aggregate pay going to those at the very to...Read more...

CEP occasional paper

Extreme wage inequality: pay at the very top

We provide new evidence on the growth in pay at the very top of the wage distribution in the UK. Sectoral decompositions show that workers in the financial sector have accounted for the majority of the gains at the top o...Read more...

CEP discussion paper

Minimum Wages and Wage Inequality: Some Theory and an Application to the UK

Research suggests that, at the levels set in countries like the US and the UK, minimum wages have little effect on employment but do have impacts on wage inequality. However we lack models that can explain these facts – ...Read more...

CEP US election analysis

Inequality and opportunity: the return of a neglected debate

During this election period many Americans are feeling angry towards the very rich, especially those working in the financial sector, who helped cause the Great Recession and yet were bailed out by the government. Increa...Read more...

CEP discussion paper

The Careers of Immigrants

I use a unique linked employer employee panel covering all wage earners in the private sector in Portugal to shed new light on the careers of immigrants. During the first ten years in the country immigrants close one thi...Read more...

CEP discussion paper

A Cautionary Note on Using Industry Affiliation to Predict Income

Many literatures investigate the causal impact of income on economic outcomes, for example in the context of intergenerational transmission or well-being and health. Some studies have proposed to use employer wage differ...Read more...

CEP occasional paper

Hooray for GDP!

Should raising the growth rate of GDP per capita be a policy goal of governments in general, and of the British government in particular? Many people would say no, for the following reasons: 1) GDP is hopelessly flawed a...Read more...

CEP discussion paper

Steady-State Equilibrium in a Model of Short-Term Wage-Posting

This paper takes the canonical Burdett-Mortensen model of wage- posting and relaxes the assumption that wages are set once-for-all, instead assuming they can only be committed one period at a time. It derives a closed-fo...Read more...

SERC/Urban and Spatial Programme Discussion Paper

Trade Liberalisation Does Not Always Raise Wage Premia: Evidence from Ugandan Districts

The process of economic integration over the past two decades has been accompanied by an expanding income wedge between skilled and unskilled workers in many developing countries. This was also the case for Ugandan wage ...Read more...

CEP discussion paper

Selection into Trade and Wage Inequality

This paper analyzes the impact of trade integration on wage inequality when there is heterogeneity across both workers and firms. By incorporating labor assignment into the heterogeneous firms literature I develop a mode...Read more...

CentrePiece article

In brief... Urban schools: does money make a difference?

This research paper is motivated by a long tail at the bottom of the educational distribution, educational inequality between those from high and low socio-economic groups and the question as to what role an increase in ...Read more...

CEP discussion paper

Trade and Inequality: From Theory to Estimation

While neoclassical theory emphasizes the impact of trade on wage inequality between occupations and sectors, more recent theories of firm heterogeneity point to the impact of trade on wage dispersion within occupations a...Read more...

CEP discussion paper

Why Are Migrants Paid More?

In efficient global labour markets for very high wage workers one might expect wage differentials between migrant and domestic workers to reflect differences in labour productivity. However, using panel data on worker-fi...Read more...

Journal article

National Institute Economic Review:

The Evaluation of English Education Policies

Educational inequalities are evident even before children start school. Those connected to disadvantage widen out as children progress through the education system and into the labour market. We document various forms of...Read more...

CEE/Education and skills discussion paper

The Evaluation of English Education Policies

Educational inequalities are evident even before children start school. Those connected to disadvantage widen out as children progress through the education system and into the labour market. We document various forms of...Read more...

CEP discussion paper

Assignment Reversals: Trade, Skill Allocation and Wage Inequality

Understanding the allocation of skilled labor across industries is necessary to explain inter-industry wage differences and the effect of trade on wages. This paper develops a multi-sector assignment model with both hete...Read more...

CentrePiece article

Unequal Britain: how real are regional disparities?

Average earnings vary widely across the regions of Britain, a fact that has prompted many decades of policies aimed at reducing regional disparities. But as Henry Overman and Steve Gibbons demonstrate, such variation rev...Read more...

CEP discussion paper

Productivity, Wages and Marriage: The Case of Major League Baseball

The effect of marriage on productivity and, consequently, wages has been long debated in economics. A primary explanation for the impact of marriage on wages has been through its impact on productivity, however, there ha...Read more...

CEP discussion paper

The Minimum Wage and Inequality - The Effects of Education and Technology

While there has been intense debate in the empirical literature about the effects of minimum wages on inequality in the US, its general equilibrium effects have been given little attention. In order to quantify the full ...Read more...

CEP discussion paper

Rising wage inequality and postgraduate education

This paper considers what has hitherto been a relatively neglected subject in the wage inequality literature, albeit one that has been becoming more important over time, namely the role played by increases in postgraduat...Read more...

CEP discussion paper

A Simple Theory of Managerial Talent, Pay Contracts and Wage Distribution

This paper develops a simple theory of pay structures and pay levels across heterogeneous agents by bringing together optimal contracts inside the firm and competitive resource allocation in the market. The central idea ...Read more...

CEP discussion paper

Managerial Incentives and Compensation in a Global Market

This paper embeds a principal-agent firm in an otherwise standard trade model a la Melitz (2003) to investigate the impact of globalization on the provision of managerial incentives and on the distribution of managerial ...Read more...

CEP discussion paper

Union Density and Varieties of Coverage: The Anatomy of Union Wage Effects in Germany

Collective bargaining in Germany takes place either at the industry level or at the firm level; collective bargaining coverage is much higher than union density; and not all employees in a covered firm are necessarily co...Read more...

CentrePiece article

Fees and loathing: higher education finance and university participation

With the UK's cap on tuition fees due to rise to £9,000, Gill Wyness looks at the impact of past fee increases on young people's decisions to go to university....Read more...

CEP occasional paper

Wage inequality, technology and trade: 21st century evidence

This paper describes and explains some of the principal trends in the wage and skill distribution in recent decades. There have been sharp increases in wage inequality across the OECD, beginning with the US and UK at the...Read more...

CEP discussion paper

Managers' Mobility, Trade Status and Wages

This paper investigates whether the arrival of managers with export experience, i.e. experience acquired through participation in the export activity of previous employers, is related to firms' international trade status...Read more...

Journal article

American Economic Journal: Applied Economics:

Minimum wages and firm profitability

We study the impact of minimum wages on firm profitability, exploiting the changes induced by the introduction of a UK national minimum wage in 1999. We use pre-policy information on the distribution of wages to implemen...Read more...

CEP discussion paper

Trade and Labor Market Outcomes

This paper reviews a new framework for analyzing the interrelationship between inequality, unemployment, labor market frictions, and foreign trade. This framework emphasizes firm heterogeneity and search and matching fri...Read more...

CentrePiece article

The shrinking middle

Guy Michaels and colleagues show how new technologies are polarising the labour market, with the middle-skilled losing out most...Read more...

CEP discussion paper

The Contribution of the Minimum Wage to U.S. Wage Inequality over Three Decades: A Reassessment

We reassess the effect of state and federal minimum wages on U.S. earnings inequality, attending to two issues that appear to bias earlier work: violation of the assumed independence of state wage levels and state wage d...Read more...

SERC/Urban and Spatial Programme Discussion Paper

Wage Disparities in Britain: People or Place?

This paper investigates wage disparities across sub-national labour markets in Britain using a newly available microdata set. The findings show that wage disparity across areas is very persistent over time. While area ef...Read more...

CEP discussion paper

Employment, Inequality and the UK National Minimum Wage over the Medium-Term

This paper assesses the impact of the National Minimum Wage (NMW) on employment and inequality in the UK over the decade since its introduction in 1999. Identification is facilitated by using variation in the bite of the...Read more...

CEE/Education and skills discussion paper

Variation in Educational Outcomes and Policies Across Countries and of Schools within Countries

This study examines the variation in educational outcomes across and within countries using the TIMSS mathematics tests. It documents the wide cross-country variation in the level and dispersion of test scores. Countries...Read more...

CEP discussion paper

The Growth of Extended 'Entry Tournaments' and the Decline of Institutionalised Occupational Labour Markets in Britain

In recent years, British labour markets have been characterised by a decline of institutional regulation of entry routes into many occupations and internal labour markets. This paper examines this change by comparing occ...Read more...

CEE/Education and skills discussion paper

The Kuznets Curve of Education: A Global Perspective on Education Inequalities

This paper describes global trends in average educational attainment and in education inequality since 1870, improving the database released by Morrisson-Murtin (2009). Inequality in years of schooling is found to be rap...Read more...

CEP discussion paper

Has ICT Polarized Skill Demand? Evidence from Eleven Countries over 25 Years

OECD labor markets have become more “polarized” with employment in the middle of the skill distribution falling relative to the top and (in recent years) also the bottom of the skill distribution. We test the hypothesis ...Read more...

CEE/Education and skills discussion paper

The Changing Economic Advantage From Private School

Despite its relatively small size, the private school sector plays a prominent role in British society. This paper focuses on changing wage and education differentials between privately educated and state educated indivi...Read more...

CEP election analysis

CEP Election Analysis 2010 - The complete Series, discussing research on some of the key policy battlegrounds of the 2010 General Election

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CEP election analysis

Inequality: Still Higher, But Labour's Policies Kept it Down

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CEP report

Bankers' Pay and Extreme Wage Inequality in the UK

It is well known that the distribution of income in the United Kingdom has widened considerably in the last three decades. This rise has been a result of a widening at both the top and bottom of the wage distribution. Mo...Read more...

CEP discussion paper

Wage Bargaining and the Boundaries of the Multinational Firm

Do variations in labor market institutions across countries affect the cross-border organization of the firm? Using firm-level data on multinationals located in France, we show that firms are more likely to outsource the...Read more...

CEE/Education and skills discussion paper

How Much Can We Learn from International Comparisons of Intergenerational Mobility?

This paper summarises research on the relative level of intergenerational mobility – whether classified by income, social class, social status or education – considering observations from 65 countries. With the exception...Read more...

CEE/Education and skills discussion paper

The Century of Education

This paper presents a historical database on educational attainment in 74 countries for the period 1870-2010, using perpetual inventory methods before 1960 and then the Cohen and Soto (2007) database. The correlation bet...Read more...

CEP discussion paper

Did the National Minimum Wage Affect UK Prices?

One potential channel through which the effects of the minimum wage could be directed is that firms who employ minimum wage workers could have passed on any higher labour costs resulting from the minimum wage in the form...Read more...

SERC/Urban and Spatial Programme Discussion Paper

Does Decentralization Matter for Regional Disparities? A Cross-Country Analysis

This paper looks at the relationship between fiscal and political decentralization and the evolution of regional inequalities in a panel of 26 countries – 19 developed and 7 developing – for the period between 1990 and 2...Read more...

CEP discussion paper

Inequality and Unemployment in a Global Economy

This paper develops a new framework for examining the distributional consequences of international trade that incorporates firm and worker heterogeneity, search and matching frictions in the labor market, and screening o...Read more...

CEP discussion paper

Educational Returns, Ability Composition and Cohort Effects: Theory and Evidence for Cohorts of Early-Career UK Graduates

An increase over time in the proportion of young people obtaining a degree is likely to impact on the relative ability compositions (i) of graduates and non-graduates and (ii) across graduates with different classes of d...Read more...

CEP discussion paper

Trading Partners and Trading Volumes: Implementing the Helpman-Melitz-Rubinstein Model Empirically

Helpman, Melitz, and Rubinstein (2008)–HMR–present a rich theoretical model to study the determinants of bilateral trade flows across countries. The model is then empirically implemented through a two-stage estimation pr...Read more...

CEP discussion paper

The Century of Education

This paper presents a historical database on educational attainment in 74 countries for the period 1870-2010, using perpetual inventory methods before 1960 and then the Cohen and Soto (2007) database. The correlation bet...Read more...

CEP discussion paper

Further Simulation Evidence on the Performance of the Poisson Pseudo-Maximum Likelihood Estimator

We extend the simulation results given in Santos-Silva and Tenreyro (2006, ‘The Log of Gravity’, The Review of Economics and Statistics, 88, pp.641-658) by considering data generated as a finite mixture of gamma variates...Read more...

SERC/Urban and Spatial Programme Discussion Paper

Education and Income Inequality in the Regions of the European Union

This paper provides an empirical study of the determinants of income inequality across regions of the EU. Using the European Community Household Panel dataset for 102 regions over the period 1995-2000, it analyses how mi...Read more...

CEP occasional paper

Changes in earnings inequality and mobility in Great Britain 1978/9-2005/6

This paper examines changes in earnings inequality and mobility between 1978/9 and 2005/6 using a unique dataset that includes both those with secure patterns of employment and a wider group who experience periods withou...Read more...

Journal article

Journal of Public Economics:

The marginal utility of income

In normative public economics it is crucial to know how fast the marginal utility of income declines as income increases. One needs this parameter for cost-benefit analysis, for optimal taxation and for the (Atkinson) me...Read more...

CEP discussion paper

Minimum Wages and Earnings Inequality in Urban Mexico. Revisiting the Evidence

This paper explores the contribution of the minimum wage to the well documented rise in earnings inequality in Mexico between the late 1980 and the late 1990s. In contrast to the view that sees minimum wages as an ineffe...Read more...

CEP discussion paper

Evolution of Locations, Specialisation and Factor Returns with Two Distinct Waves of Globalisation

This paper presents an economic geography model with two differentiated sectors that exhibit weaker inter and stronger intra-industry input-output linkages. Labour is also differentiated according to skills in a hierarch...Read more...

CEP discussion paper

Product Market Deregulation and the U.S. Employment Miracle

We consider the dynamic relationship between product market entry regulation and equilibrium unemployment. The main theoretical contribution is combining a job matching model with monopolistic competition in the goods ma...Read more...

CEP discussion paper

Wage Setting Patterns and Monetary Policy: International Evidence

Systematic differences in the timing of wage setting decisions among industrialized countries provide an ideal framework to study the importance of wage rigidity in the transmission of monetary policy. The Japanese Shunt...Read more...

Manpower Human Resource Lab paper

Performance Pay and Within-Firm Wage Inequality

This paper examines the impact of performance-related pay on wage differentials within firms. Our theoretical framework predicts that, compared to a fixed pay system, pay schemes based on individual effort increase withi...Read more...

CEP discussion paper

Efficiency Wages and the Economic Effects of the Minimum Wage: Evidence from a Low-Wage Labour Market

We exploit a natural experiment provided by the 1990 introduction of the UK National Minimum Wage (NMW) to investigate the relationship between wages and monitoring and to test for Efficiency Wages considerations in a lo...Read more...

CEP discussion paper

The Unemployment Volatility Puzzle: Is Wage Stickiness the Answer?

I study the cyclical behavior of an equilibrium search model with endogenous job creation and destruction, with focus on the model’s failure to match the observed cyclical volatility of unemployment. Job creation in the ...Read more...

CEP discussion paper

Incentives in Competitive Search Equilibrium

This paper analyses the interaction between internal agency problems within firms and external search frictions when workers have private information. We show that the allocation of resources is determined by a modified ...Read more...

CEP discussion paper

The Evolution of Inequality in Productivity and Wages: Panel Data Evidence

There has been a remarkable increase in wage inequality in the US, UK and many other countries over the past three decades. A significant part of this appears to be within observable groups (such as age-gender-skill cell...Read more...

CEP discussion paper

Spend It Like Beckham? Inequality and Redistribution in the UK, 1983-2004

A main activity of the state is to redistribute resources. Models of the political process generally predict that a rise in inequality will lead to more redistribution. This paper shows that, for the UK in the period 198...Read more...

CEP discussion paper

Wage Distributions by Bargaining Regime: Linked Employer-Employee Data Evidence from Germany

Using linked employer-employee data from the German Structure of Earnings Survey 2001, this paper provides a comprehensive picture of the wage structure in three wage-setting regimes prevalent in the German system of ind...Read more...

CEP discussion paper

The Beveridge Curve

The Beveridge curve depicts a negative relationship between unemployed workers and job vacancies, a robust finding across countries. The position of the economy on the curve gives an idea as to the state of the labour ma...Read more...

Chapter

Wage arrears and inequality in the distribution of pay: lessons from Russia

in Aspects of Worker Well-Being

Many developing and transition countries, and even some in the industrialized West, experience periods in which a substantial proportion of the workforce suffer wage arrears. We examine the implications for estimates of ...Read more...

CEP report

Changes in Wage Inequality

We examine trends in wage inequality in the US and other countries over the past four decades. We show that there has been a secular increase in the 90-50 wage differential in the US and the UK since the late 1970s. By c...Read more...

CEP discussion paper

Why Has the British National Minimum Wage Had Little or No Impact on Employment?

A century has passed since the first call for a British national minimum wage (NMW). That remarkable Fabian tract discussed wage setting, coverage, monopsony, international labour standards, inspection and compliance and...Read more...

CEP discussion paper

The Marginal Utility of Income

In normative public economics it is crucial to know how fast the marginal utility of income declines as income increases. One needs this parameter for cost-benefit analysis, for optimal taxation and for the (Atkinson) me...Read more...

Journal article

Review of Economics and Statistics:

Lousy and lovely jobs: the rising polarization of work in Britain

This paper shows that the United Kingdom since 1975 has exhibited a pattern of job polarization with rises in employment shares in the highest- and lowest-wage occupations. This is not entirely consistent with the idea o...Read more...

CEP discussion paper

American Economic Development Since the Civil War or the Virtue of Education

This paper is the first empirical framework that explains the phenomenon of fast growth combined with the demographic transition occurring in the United States since 1860. I propose a structural model that unifies those ...Read more...

CEP discussion paper

The Effect of Trade Liberalization on Informality and Wages: Evidence from Mexico

This paper studies the impact of NAFTA on informality and real wages in Mexico. Using a dynamic industry model with firm heterogeneity, it is predicted that import tariff elimination could reduce the incidence of informa...Read more...

CEP discussion paper

Search and Matching Frictions and Optimal Monetary Policy

I analyze optimal monetary policy in an economy with search and matching frictions in the labor market and staggered nominal wage and price contracts. In this framework, as opposed to the standard New Keynesian model, pr...Read more...

CEP discussion paper

The Impact of Immigration on the Structure of Male Wages: Theory and Evidence from Britain

Immigration to the UK has risen in the past 10 years and has had a measurable effect on the supply of different types of labour. But, existing studies of the impact of immigration on the wages of native-born workers in t...Read more...

CEE/Education and skills discussion paper

Education, Occupation and Career Expectations: Determinants of the Gender Pay Gap for UK Graduates

A large proportion of the gender wage gap is usually left unexplained. In this paper, we investigate whether the unexplained component is due to misspecification. Using a sample of recent UK graduates, we introduce varia...Read more...

CEP discussion paper

The Early Career Gender Wage Gap

In Finland the gender wage gap increases significantly during the first 10 years after labor market entry accounting most of the life-time increase in the gender wage gap. This paper focuses on the early career gender wa...Read more...

CEP discussion paper

Off-Shoring of Business Services and De-Industrialization: Threat or Opportunity - and for Whom?

This paper takes a new look at the issue of overseas sourcing of services. In framework in which comparative advantage is endogenous to agglomeration economies and factor mobility, the fragmentation of production made po...Read more...

CEP discussion paper

The Timing of Monetary Policy Shocks

A vast empirical literature has documented delayed and persistent effects of monetary policy shocks on output. We show that this finding results from the aggregation of output impulse responses that differ sharply depend...Read more...

CEP discussion paper

Minimum Wages and Firm Profitability

Although there is a large literature on the economic effects of minimum wages on labour market outcomes (especially employment), there is hardly any evidence on their impact on firm performance. This is surprising: minim...Read more...

CEP discussion paper

Unequal Pay or Unequal employment? A Cross-Country Analysis of Gender Gaps

There is evidence of a negative cross-country correlation between gender wage and employment gaps. We argue that non-random selection of women into work explains an important part of such correlation and thus of the obse...Read more...

CEP discussion paper

Superstars and Renaissance Men: Specialization, Market Size and the Income Distribution

A general equilibrium model of individual specialization is presented in which agents trade off the productivity and price implications of producing a narrower range of goods. Agents with highly specific skills turn out ...Read more...

CEP discussion paper

The De-Collectivisation of Pay Setting in Britain 1990-1998: Incidence, Determinants and Impact

Overall, collective bargaining coverage has dropped by around fourteen percentage points. This paper investigates the causes and consequences of the decline in collective bargaining in Britain between 1990 and 1998. One ...Read more...

Book

Unemployment: Macroeconomic Performance and the Labour Market

This book aims to provide a basis for better unemployment policy: showing how the lessons learned from experience and theory can be applied to greatly reduce the waste and misery of high unemployment. The book surveys th...Read more...

CEP discussion paper

Evaluating the Economic Significance of Downward Nominal Wage Rigidity

This paper seeks to contribute to the literature on downward nominal wage rigidity (DNWR) along two dimensions. First, we formulate and solve an explicit model of wage-setting in the presence of worker resistance to nomi...Read more...

CEP discussion paper

The Log of Gravity

Although economists have long been aware of Jensen's inequality, many econometric applications have neglected an important implication of it: the standard practice of interpreting the parameters of log-linearized models ...Read more...

CEP discussion paper

The Gender Gap in Early Career Wage Growth

In the UK the gender pay gap on entry to the labour market is approximately zero but after ten years after labour market entry, there is a gender wage gap of almost 25 log points. This paper explores the reason for this ...Read more...

CEP discussion paper

Product Market Competition Returns to Skill and Wage Inequality

This paper shows that increasing product market competition can have a direct impact on the employment relationship and on wage inequality. I develop a simple model in which an increase in product market competition incr...Read more...

CEP discussion paper

Inflation, Inequality and Social Conflict

This paper presents a political economy model of inflation as a result of social conflict. Agents are heterogeneous in terms of income. Agents’ income levels determine their ability to hedge against the effects of inflat...Read more...

CEP discussion paper

The Self Selection of Migrant Workers Revisited

Work of low-skilled migrant workers from developing countries in developed economies is a growing phenomenon and a key political and economic issue. An extensive literature has found (for the most part) that these worker...Read more...

CEP discussion paper

Labor Market Institutions, Wages and Investment

Labor market institutions, via their effect on the wage structure, affect the investment decisions of firms in labor markets with frictions. This observation helps explain rising wage inequality in the US, but a relative...Read more...

Journal article

Journal of the European Economic Association:

Evaluating the employment impact of a mandatory job search program

This paper exploits area-based piloting and age-related eligibility rules to identify treatment effects of a labor market program-the New Deal for Young People in the U.K. A central focus is on substitution/displacement ...Read more...

CEP discussion paper

We Can Work It Out: the Impact of Technological Change on the Demand for Low Skill Workers

There is little doubt that technology has had the most profound effect on altering the tasks that we humans do in our jobs. Economists have long speculated on how technical change affects both the absolute demand for lab...Read more...

CEP discussion paper

Reconciling Workless Measures at the Individual and Household Level: Theory and Evidence from the United States, Britain, Germany, Spain and Australia

Individual and household based aggregate measures of worklessness can, and do, offer conflicting signals about labour market performance. We outline a means of quantifying the extent of any disparity, (polarisation), in ...Read more...

CEP discussion paper

Do Friends and Relatives Really Help in Getting a Good Job?

Informal contacts are extensively used by both firms and workers to find jobs and fill vacancies. The common wisdom in the economic literature is that jobs created through this channel are of better quality and pay highe...Read more...

CEP discussion paper

The Returns to Apprenticeship Training

This paper uses recent data from the UK Labour Force Survey to estimate the wage gains that individuals make on average if they complete an apprenticeship programme. The results suggest gains of around 5-7% for men, but ...Read more...

CEP discussion paper

The Union Wage Premium in the US and the UK

This paper presents evidence of both counter-cyclical and secular decline in the union membership wage premiu m in the US and the UK over the last couple of decades. The premium has fallen for most groups of workers, the...Read more...

Journal article

Journal of International Economics:

Economic geography and international inequality

This paper estimates a structural model of economic geography using cross-country data on per capita income, bilateral trade, and the relative price of manufacturing goods. We provide evidence that the geography of acces...Read more...

CEP discussion paper

Lousy and Lovely Jobs: the Rising Polarization of Work in Britain

This paper argues that skill-biased technical change has some deficiencies as a hypothesis about the impact of technology on the labor market and that a more nuanced view recently proposed by Autor, Levy and Murnane (200...Read more...

CEP discussion paper

Survival of the Best Fit: Exposure to Low-Wage Countries and the (Uneven) Growth of U.S. Manufacturing Plants

This paper examines the role of international trade in the reallocation of U.S. manufacturing activity within and across industries from 1977 to 1997. It introduces a new measure of industry exposure to international tra...Read more...

CEP discussion paper

Why is the Rate of Return to Schooling Higher For Women Than For Men?

The rate of return to schooling appears to be nearly two percentage points greater for females than for males in the National Longitudinal Survey of Youth data set, despite the fact that females tend to earn less, both a...Read more...

CEP discussion paper

Poverty and Worklessness in Britain

Relative poverty in the UK has risen massively since 1979 mainly because of increasing worklessness, rising earnings dispersion and benefits indexed to prices, not wages. So poverty is now at a very high level. The econo...Read more...

CEP discussion paper

Distance, Skill Deepening and Development: Will Peripheral Countries Ever Get Rich?

This paper models the relationship between countries' distance from global economic activity, endogenous investments in education, and economic development. Firms in remote locations pay greater trade costs on both expo...Read more...

CEP discussion paper

Scale Effects in Markets with Search

Reduced-form tests of scale effects in markets with search, run when aggregate matching functions are estimated, may miss important scale effects at the micro level, because of the reactions of job searchers. A semi-stru...Read more...

CEP discussion paper

Does Inequality in Skills Explain Inequality of Earnings Across Advanced Countries?

The distribution of earnings and the distribution of skills vary widely among advanced countries, with the major English-speaking countries, the US, UK, and Canada, having much greater inequality in both earnings and ski...Read more...

CEP discussion paper

Has The National Minimum Wage Reduced UK Wage Inequality?

This paper investigates the impact on the wage distribution of the introduction, in April 1999, of the National Minimum Wage in the UK. Because of the structure of UK earnings statistics, it is not straightforward to inv...Read more...

CEP discussion paper

The Structure of Wages in What Should be a Competitive Labour Market

This paper examines the structure of wages in a very specific labour market, for care assistants in residential homes for the elderly on England's 'sunshine coast'. This sector corresponds closely to economists' notion...Read more...

CEP discussion paper

The Union Membership Wage Premium: An Analysis Using Propensity Score Matching

This paper estimates the size of the union membership wage premium by comparing wage outcomes for unionised workers with 'matched' non-unionised workers. The method assumes selection on observables. For this identifyin...Read more...

CEP discussion paper

Minimum Wages and On-the-Job Training

Becker's theory of human capital predicts that minimum wages should reduce training investments for affected workers because they prevent these workers from taking wage cuts necessary to finance training. In contrast, i...Read more...

CEP discussion paper

Give PC's a Chance: Personal Computer Ownership and the Digital Divide in the United States and Great Britain

This paper summarizes inequalities in PC ownership using data from the US Consumer Expenditure Survey (CE) and the British General Household Survey (GHS) for the period 1984-98. Between 1988 and 1994, British households ...Read more...

CEP discussion paper

Spatial Agglomeration Dynamics

This paper develops a model of economic growth and activity locating endogenously on a 3-dimensional featureless global geography. The same economic forces influence simulataneously growth, convergence, and spatial agglo...Read more...

CEP discussion paper

The Beveridge Curve, Unemployment and Wages in the OECD from the 1960s to the 1990s - Preliminary Version

This paper is an empirical analysis of unemployment patterns in the OECD countries from the 1960s to the 1990s, looking at the Beveridge Curves, real wages as well as unemployment directly. Our results indicate the follo...Read more...

CEP discussion paper

Jobs, Workers and Changes in Earnings Dispersion

The 'fractal' nature of the rise in earnings dispersion is one of its key features and remains a puzzle. In this paper, we offer a new perspective on the causes of changes in earnings dispersion, focusing on the role o...Read more...

CEP discussion paper

Nominal Wage Rigidity and the Rate of Inflation

Using the accurate and extensive data available in the UK New Earnings Survey, this paper investigates the extent to which nominal wages are downwardly rigid and whether such rigidity interferes with necessary real wage ...Read more...

CEP discussion paper

Mind the Gaps: the Evolution of Regional Inequalities in the UK, 1982-1997

In this paper we apply earnings equations for UK regions over 1982-1997. We find strong evidence of rapid convergence across regions regarding the determinants of individual wages (ie regional fixed-effects, gender gaps ...Read more...

Journal article

The Review of Economic Studies:

The changing distribution of male wages in the UK

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 inequal...Read more...

CEP discussion paper

Gender, Motivation, Experience and Wages

Using data from the British Household Panel Survey, 1991-97 this paper investigates the structure of the female wage equation and the gender wage differential. The discriminatory portion of the gender wage differential i...Read more...

Book

Tackling Inequality

Richard Layard is one of Britain's foremost applied economists, whose work has had a profound impact on the policy debate in Britain and abroad.  This book contains his most influential articles on the subject of u...Read more...

Journal article

Journal of Labor Economics:

The effects of minimum wages on employment: theory and evidence from Britain

Recent work on the economic effects of minimum wages has stressed that the standard economic model, where increases in minimum wages depress employment, is not supported by empirical work in some labor markets. We presen...Read more...