Where does increasing UK household income inequality come from?

I have already mentioned household break-up (due to divorce) and increasing income amongst the richest UK households during the period 1977-1991 (ONS report).

www.ons.gov.uk/ons/rel/elmr/economic-and-labour-market-review/no–12–december-2008/the-distribution-of-household-income-1977-to-2006-07.pdf

 

A 2011 study “Divided we Stand: Why Inequality Keeps Rising” by the Organisation for Economic Co-operation and Development (OECD) investigated economic inequality amongst workers in OECD countries.  The main reason for increasing inequality seems to be an increased difference between the demand for, and supply of, particular skills.

https://en.wikipedia.org/wiki/Economic_inequality#Measurements

That probably applies to the UK, and explains the ONS finding above.

http://www.oecd.org/social/in-it-together-why-less-inequality-benefits-all-9789264235120-en.htm

It also blames:

  • failures of education for poorer households (I would add “lack of vocational education”),
  • lack of retraining during later life,
  • insecure and part-time work,
  • lack of opportunity for women (but only worth 1 point of Gini coefficient),
  • lack of good quality jobs,
  • labour market segmentation (certain careers are only open to certain types of worker), and
  • less income redistribution through taxation (perhaps the general switch to indirect taxation of expenditure).
  • More assortative mating (the phenomenon of people marrying people with similar background, for example doctors marrying doctors rather than nurses).

 

This list may be long, but it is not exhaustive, nor is it focussed exclusively on the UK.

One thing I omitted to mention in my first draft of this post is the possibility of policy measures to avoid/mitigate income inequality.  I will consider this in a later posting.

 

 

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