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Exploring Labour Economics: Earnings Disparities and Discrimination in the UK

This study delves into different types of labour, hourly earnings in the UK, sources of pay differentials, human capital, age-earnings profiles, and the role of trade unions in the labour market. Examining gender, race, education, and experience to understand income variations.

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Exploring Labour Economics: Earnings Disparities and Discrimination in the UK

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  1. Different types of labour

  2. Hourly earnings in the UK 2000 • In both manual and non-manual occupations, men are seen to earn more than women. • Does this mean there is discrimination?

  3. Sources of differential pay • Education and training • Job experience • Race and gender • Trade union membership

  4. Human capital • The stock of expertise accumulated by a worker • It is valued for its income-earning potential in the future • A form of investment

  5. Age-earnings profiles • Age-earnings profiles show how typical earnings vary with age and educational qualifications • education induces a differential • which tends to increase with age. University degree or equivalent Income A-level or equivalent No formal qualifications Age

  6. Trade unions • Worker organisations designed to affect pay and working conditions. • A closed shop • an agreement that all the firm's workers will be members of a trade union. • A trade union may raise wages by restricting labour supply.

  7. D' D W1 Given industry demand for labour DD, equilibrium is at E0. E0 By restricting labour supply to N1, the union can increase wage to W1 D D' N1 N0 Unions in the labour market Wage With no union, the industry faces a horizontal labour supply curve at the wage W0. W0 The differential is larger for any given reduction in industry employment, the more inelastic is industry labour demand Employment

  8. Discrimination? • Women and non-whites on average receive lower incomes than white males. • Women and non-whites are concentrated in relatively unskilled jobs with fewer opportunities for promotion. • This need not reflect blatant sexism or racism by employers ...

  9. Discrimination? (2) • It may reflect • educational or other disadvantages before young workers reach the labour market • a low perceived rate of return for firms on money spent in training such workers. • Only if we allow for all these effects can we show discrimination in the labour market.

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