, Volume 4, Issue 1, pp 19–50 | Cite as

Explaining UK wage inequality in the past globalisation period, 1880–1913

  • C. Betrán
  • J. Ferri
  • Maria A. Pons
Original Paper


The current era of globalisation has witnessed a rising premium paid to skilled workers resulting in increasing wage inequality in most OECD countries. This pattern differs from that observed during the past globalisation period (1880–1913), in which wage inequality decreased in most of the Old World countries. The present debate over wage inequality focuses on the implications of globalisation, technological change, the role of labour market institutions and education. Similar factors were at work in the past globalisation process. In order to disentangle the main factors that contribute to wage inequality, we calibrate a general equilibrium model for the UK economy in the past globalisation period. The results show that a trade shock and a skilled-biased technology shock increased wage inequality. However, education and emigration had a more significant impact and led to a decrease in wage inequality.


Wage inequality Globalisation Technological change General equilibrium 

JEL Classification

N30 C68 J31 



Concha Betrán and María A. Pons acknowledge financial support from CICYT Grant SEJ2004-07402. Financial support from CICYT Grant SEJ2005-01365, GV/2007/268 Fundación Rafael del Pino and EFRD is gratefully acknowledged by Javier Ferri. Preliminary versions of this paper were presented at the Sixth Conference of the European Historical Economics Society, the European Social History Society Congress in Amsterdam, IX Encuentro de Economía Aplicada, 18th Annual Conference of the European Association of Labour Economists, XXXI Simposio de Analisis Economico, and the 8th Global Conference on Business and Economics. Thanks to all the participants for their comments and suggestions. A previous version of the paper has been published as a working paper in FUNCAS, num. 352/2007. Finally, we are very grateful for the relevant and constructive comments made by a referee.


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Copyright information

© Springer-Verlag 2009

Authors and Affiliations

  1. 1.Facultad de EconomíaUniversidad de ValenciaValenciaSpain

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