Accounting for changes in inequality since 1968: decomposition analyses for Great Britain

This report aims to assess the relative importance of the (many) factors influencing changes in income inequality between 1968 and 2006-07.

We assess the importance of the competing influences by decomposing changes in household income inequality, using three complementary decomposition methods:

• decomposition by income source;

• decomposition by population subgroup;

• decomposition by factor.

Because inequality in earnings (among individuals in employment) is an important source of changes in overall income inequality, we perform the second and third decompositions on individual earnings inequality, as well as on household income inequality.