Earnings inequality is a simpler concept than income inequality, because here we are looking at the range of earnings from just one source, employment, across all those individuals who have income from this source i.e. employees. So, earnings inequality demonstrates the gap between high and low-paid workers rather than covering the whole population.

A common measure of inequality in earned incomes is the P90/P50 ratio: the ratio of the earnings of the 90th percentile (the earnings which only 10% exceed) to the 50th percentile or median earnings. The higher this ratio is the more unequal earnings have become.

On this measure in Britain there has been a steady increase in earnings inequality since 1979 which, as in the case of income inequality, was most rapid during the 1980s.The ratio levelled off in the new millennium. In 2015 the earnings of the 90th percentile were close to twice those of the median.

#### Commentary – Earnings Inequality

Read More