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Www.skope.ox.ac.uk Education, occupations and wage inequality in the UK since the 1980s Craig Holmes SKOPE and Oxford University OUDE Research Day, October.

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Presentation on theme: "Www.skope.ox.ac.uk Education, occupations and wage inequality in the UK since the 1980s Craig Holmes SKOPE and Oxford University OUDE Research Day, October."— Presentation transcript:

1 Education, occupations and wage inequality in the UK since the 1980s Craig Holmes SKOPE and Oxford University OUDE Research Day, October 9 th 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 Year Jobs earning below 2/3 * median hourly wage Jobs earning above 1.5* median hourly wage Initial (1987)20.2%23.4% Composition effects only24.0%27.1% Final (2001)23.0%25.6% Initial (1994) 22.6%25.2% Composition effects only 25.2%27.3% Final (2007) 21.3%25.9%

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),


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