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Seeking a Premier EconomyThe Economic Effects of British Economic Reforms, 1980-2000$
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David Card, Richard Blundell, and Richard B. Freeman

Print publication date: 2004

Print ISBN-13: 9780226092843

Published to Chicago Scholarship Online: February 2013

DOI: 10.7208/chicago/9780226092904.001.0001

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Labor Market Reforms and Changes in Wage Inequality in the United Kingdom and the United States

Labor Market Reforms and Changes in Wage Inequality in the United Kingdom and the United States

Chapter:
(p.275) 7 Labor Market Reforms and Changes in Wage Inequality in the United Kingdom and the United States
Source:
Seeking a Premier Economy
Author(s):
Amanda Gosling, Thomas Lemieux
Publisher:
University of Chicago Press
DOI:10.7208/chicago/9780226092904.003.0008

Evidence shows that wage and earnings inequality has increased sharply in the United Kingdom since the late 1970s. With perhaps the exception of the United States, the magnitude of the increase in wage inequality was unmatched in any other industrialized countries. The changes in the gender wage gap experienced by the United Kingdom and the United States appear to be more dramatic than those found in other countries. One possible explanation for the unique wage inequality experience of the United Kingdom is that since 1979, the institutional structures of the labor market changed dramatically. Union decline, falls in public-sector employment, contracting out, and competitive tendering of some public-sector services resulted in changes in the way pay was formally set. This chapter explores whether these reforms in the institutional structure of the labor market contributed to the increase in wage inequality in the United Kingdom. It also looks at the role of unionization, privatization, and the minimum wage in explaining the key differences between the evolution of wage inequality in the United Kingdom and the United States.

Keywords:   wage inequality, labor market, reforms, United Kingdom, United States, unionization, privatization, minimum wage

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