Centre for the Analysis of Social Policy

Understanding Britain's Fall in Real Wages from 2008-2014:

A project to improve our understanding of the individual dynamics of wages before and after the great Recession and the Prospects of a Broad Based Sustained Wage Recovery

Principal Investigator: Paul Gregg

Project Team: Marina Fernandez-Salgado (University of Bath), Matthew Whittaker (Chief Economist, Resolution Foundation), Rob Holdsworth (Head of Communications, Resolution Foundation)

Project Partners: The Resolution Foundation

Funder: Nuffield Foundation

Duration: September 2015 - March 2017


Project rationale and aims

About the project

Britain has recently experienced unprecedented falls in real wages. The typical British worker’s weekly earnings adjusted for the cost of living have fallen by over 10 per cent since 2008. Real wage falls have affected workers across almost all of the earnings distribution, and they do not reflect falls in hours or bonuses, but in regular hourly pay. This has not been seen in previous post-war periods of recession. The conventional economic wisdom concerning how the labour market responds through recessions is profoundly challenged by the recent UK experience, and so better understanding how the highly unusual period of falling real wages came about is of considerable interest to policymakers and media commentators, and of crucial importance to economists in the UK and beyond.

Research Aims

The study will focus on three inter-related research questions:

  1. How have individuals earnings dynamics shifted through the recession and how do local unemployment levels map onto to these wage dynamics?
  2. Are young and lower skilled peoples’ earnings particularly affected due to lack of progression through lack of new job starts?
  3. Are wages becoming more volatile and how does earnings volatility sit alongside hours and job stability?

Proposed outputs

  • A minimum of three academic papers for publication, targeted at leading academic general and field journals such as the Economic Journal, Journal of Labour Economics and Journal of Population Economics. Each of these three pieces will have a non-technical summary report or policy briefing note for dissemination to a non-academic audience.
  • Draft working papers will be produced in the research series for Dept. for Social and Policy Sciences at University of Bath as well as the Centre for Economic Performance at the LSE and IZA in Germany, of which applicants are associates.
  • 3 descriptive reports published by The Resolution Foundation
  • Presentations at major academic conferences such as the Royal Economic Society, European Economic Association and European Association of Labour Economists.
  • Regular joint events to present ongoing findings
  • An academic workshop with invited policy makers
  • A large public event (Resolution Foundation)
  • Policy Roundtable (Resolution Foundation)

Find out more about this project

Name: Prof Paul Gregg
Title: Professor
Department: Dept of Social and Policy Sciences
Location: 3 East 3.36
E-mail: pg344@bath.ac.uk
Phone: work+44 (0) 1225 384055