THE DECLINE OF LABOR-MARKET INSTITUTIONS AND THE RISE IN WAGE INEQUALITY IN BRITAIN

At the same time as the role of labour market institutions declined ve ry dramatically in Britain there was a very sharp rise in wage inequal ity that, since 1980, has increased at a faster pace than in most adva nced countries. Britain in the 1980s and early 1990s therefore provide s a very good testing ground for evaluating the importance of labour m arket institutions in explaining the evolution of the wage structure. I look at this in terms of two institutions that have traditionally pr opped up wage levels at the bottom end of the wage distribution, union s and minimum wages. I find that their weakening has played an importa nt part in the rise in wage inequality in Britain. (C) 1997 Elsevier S cience B.V.