Econometrica: Jul, 1959, Volume 27, Issue 3

An Analysis of the Distribution of Wages and Salaries in Great Britain

https://doi.org/0012-9682(195907)27:3<355:AAOTDO>2.0.CO;2-E
p. 355-381

T. P. Hill

In this paper estimates are made of the net effects of several demographic variables on the level of individuals' wages or salaries. The income data are taken from a cross-section sample survey which makes it possible for each income recipient to be classified by a number of different factors simultaneously. The method of analysis is based on techniques developed for analysing experimental data, and it is shown that certain problems which can be avoided by the use of efficient designs for controlled experiments will tend to arise in acute forms when the data are obtained from cross-section samples. In the latter part of the paper are presented distributions of expected incomes based on the simple model of income formation used in the preceding analysis. Distributions of residual incomes are also given and the properties of these residuals are examined. The discussion throws light on the role of some important demographic variables in shaping the distribution of employment incomes and on the validity of certain hypotheses which have been advanced to explain the distribution of incomes.