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Focuses on the approach to interpreting earnings equality found in the writings of a variety of economists and in particular, technological change and its effects on the demand skill resulting in earning inequality. Argues that the evidence in favour of the technological effect is weak and presents some alternatives for further consideration.

Labour markets across the globe have recently been characterized by rising wage inequality, real wage stagnation or both. Most academic work to date considers each in isolation, but the research in this paper attempts to pull them together, arguing that higher wage inequality takes on an added significance if real wages of the typical worker are not growing, and showing that inequality rises and real wage slowdowns have gone hand-in-hand with one another due to wages decoupling from productivity in the United States and United Kingdom. The lack of growth of real wages at the median in the United States is also shown to be linked to the declining influence of trade unions.

De‐unionization has been one of the most significant features of the British labour market in the 1980s. All conventional measures of union presence and power vividly demonstrate this. The proportion of British establishments which recognised manual or non‐manual trade unions for collective bargaining over pay and conditions fell by almost 20% (from 0.67 to 0.54) between 1980 and 1990; the proportion of workers covered by a collective agreement fell from 0.71 in 1984 to 0.51 in 1990 (Millward et al., 1992); aggregate union membership fell from 13.2 million in 1980 to 9.9 million by 1990; the corresponding fall in aggregate union density was from 54% to 38% (and it has continued to fall post‐1990). The longer time series profile of aggregate union density (defined as the number of union members divided by the total workforce) is very dramatic. The 1980s declines have completely reversed the gains achieved in the 1970s and union density now stands at its lowest level for 30 years.

Presents a theoretical approach to analysing the effects of minimum wages on employment which is intended to conform more with the functioning of actual labour markets than do other popular models traditionally used to analyse the likely effects of minimum wages on employment. The model has the desirable property of not only allowing for the negative effect predicted by conventional models, but also permiting a non‐negative impact which is consistent with several recent empirical pieces of work. Examines the employment effects of the industry‐level system of minimum wages which operated in the UK until September 1993. Results reported are not in line with the orthodox model as they suggest a neutral or positive impact of Wages Council minimum wages on employment between 1978 and 1990.

Examines the recent turnaround in UK productivity compared to other leading industrial nations and whether the improvement is sustainable, with reference to trade unions. Considers the policies required to further improve productivity, the distribution of the benefits among shareholders and workers, and wider community concerns such as the environment. Concludes that there has been no UK “economic miracle” in the 1980s, and that the signs for continued growth are not encouraging.