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The Distribution of Individual Earnings in Historical Perspective

This study examines the distribution of individual earnings over time, highlighting the rise of wage inequality in recent decades. It explores data from various sources and periods, emphasizing the importance of frequent observations and real distributions.

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The Distribution of Individual Earnings in Historical Perspective

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  1. PSE January 2007 The Distribution of Individual Earnings in Historical Perspective A B Atkinson, Nuffield College, Oxford and PSE

  2. Introduction • 1. Taking Today’s Sources back to 1945 • New Earnings Survey in UK • DADS data in France • CPS in the US • 2. Before the Second World War • US and Canadian Population Censuses • DADS data in France • Irish Census of Production • Before the First World War: UK • Official earnings surveys • Williamson estimates • New evidence from the income tax schedules • Conclusions

  3. “Possibly the most striking phenomenon in the British labour market over the last couple of decades has been the massive rise in wage inequality. Wage differentials have risen to a degree that pay inequality is now higher than at any time over the last century” (Dickens, 2000, page 27). “Since the late 1970s wage inequality increased very dramatically in the United Kingdom. After showing relative stability for many decades (and a small compression in the 1970s) there has been an inexorable upward trend in the gap between the highest and lowest earners in the labour market.” (Machin, 1996, page 62)

  4. 3.0 4.5

  5. Introduction • 1. Taking Today’s Sources back to 1945 • New Earnings Survey in UK • DADS data in France • CPS in the US • 2. Before the Second World War • Before the First World War: UK • Conclusions

  6. Conclusions: • Three distinct periods: “Golden Age”, Post-1968(1964), and ICT Age. • Different country experiences. • Importance of looking at top as distinct from decile ratio. • Importance of looking at annual (frequent) data.

  7. Introduction • 1. Taking Today’s Sources back to 1945 • New Earnings Survey in UK • DADS data in France • CPS in the US • 2. Before the Second World War • US and Canadian Population Censuses • DADS data in France • Irish Census of Production • Before the First World War: UK • Conclusions

  8. Introduction • 1. Taking Today’s Sources back to 1945 • New Earnings Survey in UK • DADS data in France • CPS in the US • 2. Before the Second World War • US and Canadian Population Censuses • DADS data in France • Irish Census of Production • Before the First World War: UK • Official surveys • Williamson estimates • New evidence from the income tax schedules • Conclusions

  9. Problems • Not in fact stable: top decile changes by more than 10 percent • Coverage limited: male manual workers in certain sectors • Data of dubious quality • Nothing on intervening years

  10. Source of the UK 1886 data “The rates of wages paid, or of average piece-earnings, in a normal week without overtime were asked for each occupation in each industry in each locality. … An attempt was made to describe the distribution of wages by the assumption that the wages for the same occupation in one district fell in the same five shillings grade for all operatives, distinguishing men, women, boys and girls.” (Bowley, 1937, pp 100 and 101).

  11. J G Williamson, Did British Capitalism Breed Inequality?, 1985.

  12. Income tax Schedule E and Schedule D (income from employment) Data exist for 1845-1876 and 1898-1913 Typically 15 ranges Cover small fraction of employed population (1% in 1875), but use control totals from Feinstein. Some years used by Wiliamson but not for this purpose.

  13. Conclusions: • Sequence of “episodes” rather than grand swings • Differences at different points in the distribution • Differences across countries • To study rich pattern, need: • Frequent observations • “Real” distributions • There are data that have not yet been exploited!

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