This paper forms part of a project on Globalization and Social Exclusion supported by the EU, executed at the University of Warwick. We are grateful to Lisandro Abrego, Carlo Perroni, Paul Brenton, Matthias Lücke, Ana Rutte Cardoso, Ray Riezman, David Collie, Geoff Reed and Ben Zissimos for conversations and suggestions, as well as to two anonymous referees.
SHORT- AND LONG-RUN DECOMPOSITIONS OF UK WAGE INEQUALITY CHANGES
Article first published online: 19 JAN 2007
Bulletin of Economic Research
Volume 59, Issue 1, pages 1–24, January 2007
How to Cite
Huw Edwards, T. and Whalley, J. (2007), SHORT- AND LONG-RUN DECOMPOSITIONS OF UK WAGE INEQUALITY CHANGES. Bulletin of Economic Research, 59: 1–24. doi: 10.1111/j.0307-3378.2007.00252.x
- Issue published online: 19 JAN 2007
- Article first published online: 19 JAN 2007
- general equilibrium;
This paper focuses on the decomposition of observed increases in UK wage inequality since 1979 into the component factors of competition from low-wage imports and technological change. Building on recent work by Abrego and Whalley, we argue that the length of production run and degree of fixity of factors is crucial in such analyses. If the response of labour markets to date is a short-run response, in which factors and output have not adjusted fully, then analysis of the causes of increased inequality is substantially altered relative to a long-run factors mobile world.