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Education, occupations and wage inequality in the UK since the 1980s

Education, occupations and wage inequality in the UK since the 1980s. Craig Holmes SKOPE and Oxford University OUDE Research Day, October 9 th 2013. Introduction. Wage inequality in the UK has risen since the 1980s. Introduction. Rising upper- and lower-tail inequality until mid 1990s

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Education, occupations and wage inequality in the UK since the 1980s

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  1. Education, occupations and wage inequality in the UK since the 1980s Craig Holmes SKOPE and Oxford University OUDE Research Day, October 9th 2013

  2. Introduction • Wage inequality in the UK has risen since the 1980s

  3. Introduction • Rising upper- and lower-tail inequality until mid 1990s • Small increases in upper-tail inequality since mid 1990s (except at very top), coupled with falling inequality at bottom end

  4. Workforce composition • Education and earnings are strongly correlated • Increasing the size of the more educated groups drives up inequality

  5. Workforce composition • Other compositional changes also have inequality-increasing effects • This is true for past decade too

  6. The wage structure • Overall effect on inequality depends on structure of wages associated with these variables • For education: • Increasing demand for skills widens earnings inequality between the more and less educated groups • Increasing education attainment could reduce earnings inequalities as earnings benefits spread more widely

  7. The wage structure • We do see inequality reducing changes in the wage structure...

  8. The wage structure • ...but these are not attributable to educational attainment

  9. Distribution of jobs • Seems to reflect ‘correction’ of compositional changes – not as many people in high wage jobs as we’d predict

  10. Distribution of jobs • Result: increasingly heterogeneous occupational groups

  11. Distribution of jobs • Graduates only:

  12. Conclusion • Policymakers tend to work with a ‘room at the top’ mindset focus on supply of skills through increasing educational attainment • Higher wage jobs are more scarce that this suggests – limits the ability of education to reduce labour market inequalities • The problem may be a different sort of ‘demand for skill’ problem to the one the UK has often faced – not a market failure or a problem of short-termism. • In the mean time, should leads to a great concern about intergenerational inequalities

  13. Contact Details Craig Holmes ESRC Centre on Skills, Knowledge and Organisational Performance (SKOPE), Email: craig.holmes@pmb.ox.ac.uk

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