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Labour market and income inequalities in the United Kingdom, 1968–2021

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  • Jonathan Cribb

Abstract

This paper examines trends in working‐age labour market and disposable income inequalities in the United Kingdom from 1968 to 2021 using microdata harmonised with 16 other high‐income countries. In the UK, the 1980s was a period of rising labour market inequalities and inequality in disposable incomes. Since the 1980s, changes have been more modest. Changing hours of work and changes in family structure have been important for understanding trends in individual and household earnings inequalities, respectively. Tax and benefit reforms have also played an important role in driving disposable income inequalities, with notable redistribution towards low‐income households between 1997 and 2010. We also provide evidence on the effects of the COVID‐19 pandemic in the UK. Disposable income inequality fell slightly as increases in state benefits during the pandemic boosted incomes of poorer households.

Suggested Citation

  • Jonathan Cribb, 2024. "Labour market and income inequalities in the United Kingdom, 1968–2021," Fiscal Studies, John Wiley & Sons, vol. 45(2), pages 131-142, June.
    • Handle: RePEc:wly:fistud:v:45:y:2024:i:2:p:131-142
    DOI: 10.1111/1475-5890.12373
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    1. Mike Brewer & Liam Wren-Lewis, 2016. "Accounting for Changes in Income Inequality: Decomposition Analyses for the UK, 1978–2008," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 78(3), pages 289-322, June.
    2. Chris Belfield & Richard Blundell & Jonathan Cribb & Andrew Hood & Robert Joyce, 2017. "Two Decades of Income Inequality in Britain: The Role of Wages, Household Earnings and Redistribution," Economica, London School of Economics and Political Science, vol. 84(334), pages 157-179, April.
    3. Stuart Adam & James Browne, 2010. "Redistribution, work incentives and thirty years of UK tax and benefit reform," IFS Working Papers W10/24, Institute for Fiscal Studies.
    4. Richard V Burkhauser & Nicolas Hérault & Stephen P Jenkins & Roger Wilkins, 2018. "Top incomes and inequality in the UK: reconciling estimates from household survey and tax return data," Oxford Economic Papers, Oxford University Press, vol. 70(2), pages 301-326.
    5. Cribb, Jonathan & Emmerson, Carl & Tetlow, Gemma, 2016. "Signals matter? Large retirement responses to limited financial incentives," Labour Economics, Elsevier, vol. 42(C), pages 203-212.
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