Inequality: still higher, but labour's policies kept it down

Stephen Machin and John van Reenen

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Overall wage and income inequality rose slightly under the Labour government since 1997. This was driven by the top half (especially the top 10 per cent) of the income distribution. There was no change in inequality (and even falls on some measures) for those in the bottom half of the distribution. These are the key findings of the latest Election Analysis from the Centre for Economic Performance (CEP). Authors Professors Stephen Machin and John Van Reenen note that the increase in wage inequality is an international phenomenon driven by increases in the demand for more skilled workers. There is relatively little that any government can do about this in the long term: the best policy is to keep improving the skills of the workforce through education and training. The tax and benefit policies of the Labour government have meant that inequality is considerably lower than it would have been under the previous Conservative administration, especially for those in the bottom 20 per cent. But since the inequality 'escalator' of pre-tax earnings has been moving upwards, the policies have at best kept inequality stable rather than significantly reducing it.

JEL-codes: J53 (search for similar items in EconPapers)
Pages: 10 pages
Date: 2010-04
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://eprints.lse.ac.uk/57989/ Open access version. (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:57989

Access Statistics for this paper

More papers in LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library LSE Library Portugal Street London, WC2A 2HD, U.K.. Contact information at EDIRC.
Bibliographic data for series maintained by LSERO Manager ().