The Distribution of Earnings of Employees in Great Britain

Abstract

Frequency distributions of the wages and salaries of individual employees can be obtained from wagecensuses, tax records and the Family Expenditure Survey. These various sources are described and compared. Some old and new data are presented which illustrate current variations in earnings and also confirm previous findings. Some of the main distributions are of the lognormal and Champernowne forms, and their relative dispersions show a very marked stability over time. In the case of manual workers, the weekly and hourly earnings of both men and women appear to have almost identical distributions, apart from scale factors. Existing theories do not seem to provide a complete explanation of the empirical results. 1968]THATCHER -Distribution of Earnings of Employees 135 3. SOURCES OF DATA The Board of Trade and Ministry ofLabour SurveysThe earliest surveys of the distribution of weekly earnings were known as "Wage Censuses". These were confined to manual workers, and were made by obtaining details from large numbers of employers about the earnings of each of the manual workers on their payrolls. This method was first used by the Board of Trade in 1886. Owingto the expense involved, full-scale surveys of this type have been very infrequent and only three others have been held, in 1906, 1938 and 1960. Their coverage was extensivebut not complete: in particular they did not include agriculture, coal mining, distributive trades or miscellaneous services, though in 1960 distributions for coal miners and agricultural workers were available separately.

The Long Run Earnings Distribution in Five Countries: “Remarkable Stability,” U, v or W?

“…the dispersion of individual earnings remains very closely the same” (Phelps Brown, 1979, p. 4). Stability has been regarded as a long‐standing feature of the British earnings distribution: “thus in a period [1886 to 1966] when the level of earnings of adult male manual workers increased by a factor of nearly 16, it appears that their dispersion (measured in percentage terms) changed very little” (Thatcher, 1968, p. 163).…”

THE SIZE MOBILITY OF EARNINGS*

“…The UK Ministry of Labour data on the weekly earnings of adult manual male and females are approximately lognormal, according to Thatcher (1968). However, Harrison (1981) disaggregated the New Earnings Survey of weekly male earnings for 1972 and qualified earlier results.…”

Constructing a Tax‐benefit Model: What Advice Can One Give?

“…In addition to assessing the validity of the survey income aggregates and making corresponding adjustments, the distribution of income from each source ought also to be explored. This is clearly a major task which has been attempted for earnings in the U.K. by Thatcher (1968) and Atkinson, Micklewright and Stern (1988).…”