ACCOUNTING FOR INEQUALITY TRENDS - DECOMPOSITION ANALYSES FOR THE UK,1971-86

Eight explanations for UK income inequality trends between 1971 and 19 86 are assessed by pooling evidence from inequality index decompositio ns by population sub-group and by income source. The principal causes of the aggregate trends were a mixture of changes in earnings inequali ty, employment structure and unemployment, but this mixture changed ov er time. The impact of wage inequality changes on income inequality ch anges fell during the 1970s and 1980s, reflecting the secular decline in the importance of employment earnings for household income packages . Unemployment changes had their largest impact at the start of the 19 80s. Between 1981 and 1986 self-employment income changes appear to ha ve had the largest influence.