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Accounting for Changes in Income Inequality: Decomposition Analyses for the UK, 1978–2008

Author

Listed:
  • Mike Brewer

    (University of Essex)

  • Liam Wren-Lewis

    (PSE - Paris-Jourdan Sciences Economiques - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

Abstract

We analyse income inequality in the UK from 1978 to 2009 in order to understand why income inequality rose very rapidly from 1978 to 1991 but then remained broadly unchanged. We find that inequality in earnings among employees has risen fairly steadily since 1978, but other factors that caused income inequality to rise before 1991 have since gone into reverse. Inequality in investment and pension income has fallen since 1991, as has inequality between those with and without employment. Furthermore, certain household types – notably the elderly and those with young children – which had relatively low incomes in the period to 1991 have seen their incomes converge with others.

Suggested Citation

  • Mike Brewer & Liam Wren-Lewis, 2016. "Accounting for Changes in Income Inequality: Decomposition Analyses for the UK, 1978–2008," PSE-Ecole d'économie de Paris (Postprint) halshs-01313784, HAL.
    • Handle: RePEc:hal:pseptp:halshs-01313784
    DOI: 10.1111/obes.12113
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-01313784v1
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