Wage inequality in UK Essay Example | Topics and Well Written Essays - 2500 words

Wage inequality in UK - Essay Example Thus, one viable interpretation, not necessarily the correct interpretation, of the disparities in wage based on gender, race, ethnicity or localities that may be observed in the United Kingdom is that the disparities are due to the differential productivity of labour resulting from differences in gender, race, ethnicity, locality or on how each social group would trade leisure for work. Lately, however, economics have recognized the role of institutional and social factors on how wage rates may differ across social groups based on gender, race, ethnicity, or locality. The institutional or social factors may be a result of discrimination, differential power parity, or political dominance. There is not much theorizing in this area of study by conventional economists and, in the literature, the discrimination, differential power parity, or political dominance is typically not articulated by a comprehensive or fundamental socio-economic theory but by empirical models using dummy variabl es that represent stratification by any one of the social variables like gender, race, ethnicity, or locality. ... Demand and supply for skilled and unskilled labour before and after globalisation Source: Towers 2006, p. 6 At the same time, a phenomenon that is seen to be affecting how disparities are being affected by economic events is globalization. Towers (2006, p. 6), for instance, posited that with globalisation, the demand for skilled labour has shifted rightward while those for unskilled labour has shifted leftward. The rightward shift in the demand for skilled labour and the leftward shift in demand for unskilled labour are shown in Figure 1. The rightward and leftward shifts in the demand for skilled and unskilled labour, of course, is translated to higher real wage rates for skilled labour and lower real wage rates for unskilled labour. Based on Tower (2006, p. 6), therefore, it is also viable to argue that to the extent that skilled and unskilled labour has been associated with gender as well as gender dominance, exploitation, or the like, globalization can been seen as a variable tha t can exacerbate or moderate income inequality based on genders. Further, to the extent that opportunities or exposure to skills training and the like can differ across social groups, globalisation can also exacerbate or moderate income inequalities across races, ethnicity, and localities. Figure 2. Log wage differential between men and women in the United Kingdom 1978-1999 Source: Gosling and Limeux 2004, p. 280 The working assumption of the work of Gosling and Limeux (2004) is that there is wage disparity in the United Kingdom in favour of men. The log of differential shown in Figure 2, however, shows that wage rates of women are rising faster than the wage rates of men. Thus, Figure 2 suggests that with globalisation, women has been increasing their wage rates faster than the men's