Caught in a trap? Wage mobility in Great Britain: 1975-94

In this paper I study wage mobility in Great Britain using the New Earnings Survey from 1975-1994 and the British Household Panel Survey from 1991-1994. Measuring mobility in terms of docile transition matrices, I find a considerable degree of immobility within the wage distribution from one year to the next. Mobility is higher when measured over longer time periods. Those in lower deciles in the wage distribution are much more likely to exit into unemployment and non-employment. Measuring mobility by studying changes in individuals actual percentile rankings in the wage distribution, I find evidence that short run mobility rates have fallen since the late 1970s.