Unit 4 (Inequality) Flashcards
The Gini coefficient
- The cumulative share of income earned by each share of
households, measuring a society’s distance from perfect equality - is between 0 and 1 (the higher inequality, the higher the coefficient
The 90-10 Wage Gap
- the difference in the 90th and 10th
percentiles as a percent of the 10th percentile wage, or (w90 –
w10)/w10
The 50-10 Wage Gap
The difference in the 50th and 10th
percentiles as a percent of the 10th percentile wage, or (w50 –
w10)/w10
The skilled to unskilled wage gap
- Gap increases if the relative demand for skilled workers increases faster than the relative supply of skilled workers
(DH ↑ > SH ↑)
Possible Factors That Widened the Wage Gap between skilled and
unskilled workers
- Supply and demand
- Increased physical capital
- Supply shifts
- international trade
- Institutional changes in the labour market
Supply and demand (Widened skill wage gap)
- Demand for skilled workers increased relatively more than
demand increased for unskilled workers - A decrease in the supply of skilled workers or an increase in the
demand for skilled workers could cause a widening of the wage
gap
increased physical capital
- Increased physical capital helped to increase the productivity of
skilled workers - machines are replacing low
skilled workers, or more highly skilled
workers needed e.g. for research
Supply Shifts
In demand of goods and services as well as in
supply of skills
international trade
e.g. outsourcing of low skilled jobs to foreign
countries
Institutional changes in the labour market
- Trade unions
- Minimum Wage
- Unemployment Insurance
- Active labour market policies (e.g. furlough scheme during
pandemic
Ways to calculate gender pay gap (GPG)
- Adjusted
- Unadjusted
Unadjusted GPG
- Raw figure without any adjustment for certain factors e.g.
working pattern, motherhood, occupational segregation etc
Adjusted GPG
- Adjusted pay gap measures the pay gap after adjusting for various factors that might influence the pay gap
- such as type of occupation, education, private/public sector and
experience
The Equality Act 2010 UK
- Statutory Duties
- Gender Pay Gap Information
The Equality Act 2010 UK (Statutory Duties)
- Men and women in the same employment performing equal work must receive equal pay, unless any difference in pay can be justified
The Equality Act 2010 UK (Gender Pay Gap Information)
- As of 2017 Large employers (more than 250) must publish data on their gender pay gaps
The Equality Act 2010 (Specific Duties and Public Authorities)
Public bodies with over 250 employees must:
- Publish relevant, proportionate information demonstrating compliance with the Equality Duty annually.
- Set and publish equality objectives at least every four years.
Gender pay gap contributing factors
- Working Pattern
- Motherhood
- Labour market segmentation
- Age groups
Working pattern
- Form of contract e.g. Full time, Part Time, mini job, casual job
Age groups
- Gender Pay Gap lower among young employees
Labour market segmentation
- High wage sectors such as science, technology and engineering sectors are male dominated (80% of employees)
- About 30% of the total gender pay gap can be explained by an overrepresentation of women in relatively low-paying sectors such as care, sales or education
Motherhood penalty
- systematic disadvantages mothers face
- lower hourly pay (steepens with
each child) - overlooked for promotions
- left out of training and education
opportunities - sidestepped from specific high-
value projects - End up in part time instead of full
time
intergenerational regression
Yc = βYf + S
Yc= Son;s lifetime earnings
β = intergenerational income elasticity
Yf = father’s lifetime earning
S = captures all other factors influencing the child’s income
Factors in intergenerational mobility
- Education
- Occupation/Industry
- Social Class
- Social capital
