These are research papers that have either been produced by members of our team outside of the WED project or papers that are relevant in some way to the work of the WED project.
When it comes to wages, conversation often revolves around how much people earn. But earnings are rarely static: they fluctuate due to variations in hours worked, bonuses, voluntary job changes, and redundancies. This volatility matters, because unpredictable earnings can mean financial stress, difficulty planning for the future, and increased reliance on credit or social support. So understanding earnings volatility is crucial for building fairer labour markets, effective social policies, and financial security in an uncertain world. This report uses a newly available dataset – payroll data held by HMRevenue and Customs on over 250,000 working-age people covering April 2014 to March 2019 – to look at monthly and weekly volatility in employee pre-tax earnings. It is one of a very few UK studies to look at high-frequency earnings volatility on a large scale, and the first do so on a sample that is representative of the population of employees in the UK.
Using administrative data from the Annual Survey of Hours and Earnings linked to the 2011 Census of England and Wales, this paper explores the labour market performance of first-generation immigrants and compares it to that of UK-born employees. By focusing on various labour market outcomes and distinguishing immigrants based on their years of residence in the UK, the analysis reveals that more recent immigrants, on average, earn less, work longer hours, and are more likely to be employed in low-skilled occupations or temporary employment compared to observationally equivalent UK-born employees. However, the labour market performance of immigrants with ten or more years of residence in the UK is more comparable to that of their UK-born counterparts. These patterns are similar for males and females, but there is considerable heterogeneity in terms of ethnicity, country of birth, and reason for migration, as well as across the pay distribution.
Aghion, P., Bergeaud, A., Blundell, R.W. and Griffith, R., 2024. Social skills and the individual wage growth of less educated workers. Institute for Fiscal Studies Working Paper.
Matched employee-employer data from the UK are used to investigate the importance of social skills, in particular team-work and communication with co-workers, as a driver of wage growth for workers with lower formal education. We find that in social skills tasks, workers enjoy greater wage progression with tenure and also accrue higher returns in firms with a higher concentration of more educated colleagues. Additionally, workers exit sooner from jobs where social skills are more important. We rationalize these dynamics through a model that assesses social skills based on complementarity with a firm’s assets, where social skills, initially opaque to both the employee and employer, become increasingly apparent over time.
Using a linked employer-employee dataset covering large firms, we present new evidence on British wage inequality trends over the past two decades. Differences between firms in the average wages they paid did not drive these trends. Between 1996 and 2005, greater wage variance within firms accounted for eighty-six percent of the total increase in wage variance among employees. In the following decade, wage inequality between firms continued to increase, whereas overall wage dispersion decreased. Approximately all the contribution to inequality dynamics from estimated firm-specific factors, throughout the employee wage distribution, disappears after accounting for the changing occupational content of wages.
Using UK employer-employee panel data, we present novel facts on how wages and working hours respond to the business cycle within jobs. Firms reacted to the Great Recession with substantial real wage cuts and by recruiting more part-time workers. A one percentage point increase in the unemployment rate led to an average decline in real hourly wages of 2.8 percent for new hires and 2.6 percent for job stayers. Hiring hours worked were substantially procyclical, while job-stayer hours were acyclical. These results show that real wages are not rigid and that the labor costs of new hires are especially flexible.
If fiscal policy exerts pressure on public services, then attention often falls on the public-private sector wage differential. Estimated with longitudinal employer-employee data for the years 2002-16 in the United Kingdom, among men there was no significant public sector wage premium. However, women received an average 4% premium compared with working in private sector firms.
Abstract: UK earnings data are collected through many different channels and summarised using different methods. Hence, the stories told by aggregate figures may appear to conflict with one another. While the overall picture of earnings is similar, there are important differences in the detail. This article draws together the various sources of earnings aggregates to investigate similarities and inconsistencies and to improve understanding of this data. In particular, this work highlights the benefit from bringing sources together at the unit level to enhance analytical capability and throw more light on the coherence between data sources.
This article investigates how the wage rate for a job reacts to changes in the national minimum wage (NMW). There is evidence that as the NMW increases, the salaries of all low-paid individuals increase by much the same amount regardless of their distance from the minimum wage. This article introduces the concept of the company minimum wage (CMW), that is, the minimum wage paid by a particular company in a particular year. There is evidence to suggest that these CMWs are set relative to ‘focus’ points, such as £5.00, £5.50, despite the fact that the NMW does not reflect these round numbers. This suggests firms have some flexibility in the way they set wages and they are not wholly driven by the NMW. There is evidence that companies prefer to maintain wage differentials relative to general labour market conditions. The NMW contributes to the absolute level of wages, but it is not the only or the dominant factor.