Did Outsourcing to Low-wage Countries Hurt Less-skilled Workers in the UK?

Abstract

Over much of the past two decades the relative wages and employment of the low skilled have fallen dramatically in the UK. Between 1980 and 1992, for example, the real earnings of the top tenth of male earners in the UK rose by 51 per cent, whereas the earnings of the bottom tenth only increased by 11 per cent.¹ Nickell (1996) shows that the unemployment rate of less-skilled males in the UK rose from 6.4 per cent in the mid-1970s to 18.2 per cent in the mid-1980s, whereas over the same period the unemployment rate of skilled males rose only from 2.0 per cent to 4.7 per cent. The rise in UK wage inequality has also been in many directions. Although the most significant widening of relative wages has occurred between manual and non-manual workers, there has also been a large increase in the dispersion of wages within the categories of both manual and non-manual workers (see Gregg and Machin, 1994).