Public sector pay reform and the implications for the gender wage gap of the resulting changes in earnings inequality
This thesis analyses the public sector pay reforms, earnings inequality and the gender wage gap in the UK between 1991 and 1996. The aim is to examine the relationships between the pay reforms and the level of earnings inequality, and between the level of earnings inequality and the gender pay gap. The analysis employs British Household Panel Survey data to distinguish the magnitudes of earning inequality and the gender pay gap in 1991 and 1996, and then utilises decomposition techniques in order to distinguish the determinants of these gaps. These decompositions, developed by Juhn, Murphy and Pierce, and Blau and Kahn, show the magnitude of the effects of the changing characteristics of the workforces in the different sectors and the prices paid for, the returns to, these characteristics, both observed and unobserved. These techniques are employed to reveal the link between the public sector pay reforms, and sub sectors, and also the link between changes in the level of residual earnings inequality and changes in the gender pay gap. Hypothetical earnings distributions, are constructed to show how the level of earning inequality and the gender pay gap would be affected in both the public sector and the economy as a whole, if by 1996 the public sector reforms had caused public and private sector returns to converge. In this way, the degree to which the public sector pay reforms may have affected the level of earnings inequality and the gender pay gap in the public sector is revealed.