University of Sussex
Kauma, Bridget Chifundo.pdf (3.29 MB)

Three essays on productivity, regional wage disparities, and the public sector pay gap in Great Britain in a period of economic shocks

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posted on 2023-06-10, 05:04 authored by Bridget KaumaBridget Kauma
The thesis re-visits three themes relating in turn to the UK productivity puzzle, regional wage disparities, and the public sector wage premium. The second chapter employs a decomposition analysis linking micro- to macro-level outcomes to examine whether the 2008 financial crisis exerted an effect on UK productivity. The research utilizes the HMRC VAT returns panel and reveals that the financial crisis had a disproportionate effect on both labour and total factor productivity. A key finding is that the within-firm allocation of resources is pro-cyclical and a significant driver of productivity dynamics at the macro level over this period. The third chapter provides a detailed econometric-based descriptive analysis of local wage disparities for men in Great Britain. The analysis employs the Annual Survey of Hours and Earnings (ASHE) dataset to examine how regional disparities at the Travel to Work Area (TTWA) level are evolving and whether the financial crisis is implicated in this evolution. The key conclusion drawn from the analysis is that the disparity in wage differentials across TTWAs narrowed over the period of analysis, with the downward trend evident before, and not given any impetus by, the financial crisis. However, despite the contraction in regional wage disparity, there remains strong persistence in the rank ordering of regional wages. In addition, the analysis reveals that even with falling wage inequality across TTWAs, the inequality within TTWAs has increased over time with some indication of wage polarization emerging within local labour markets. Using the ASHE dataset over the period 2002 to 2019, the fourth chapter investigates if either the financial crisis or the subsequent austerity programme introduced by the coalition and subsequent Conservative governments impacted the public sector wage premium for men in Great Britain across the unconditional pay distribution. The empirical analysis suggests some degree of stability in the public sector pay premium over time and across the distribution, with neither the financial crisis nor the austerity programme found to impact the magnitude of the public sector wage premium for men.


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University of Sussex

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