title: The social origin pay gap in the UK labour market
Creators: name: Vallely, Michael
Publisher: name: University of Glasgow
Year: 2024
Subjects: subject: social origin, social class, pay gaps, labour market outcomes, item non-response, social capital, cultural capital.

description: This thesis is composed of four chapters; a critical literature review and three empirical chapters that examine the social origin pay gap in the UK labour market. The overarching research question of this thesis is: To what extent does social origin explain labour market outcomes independently of level of education?

Chapter 1 provides a critical literature review of the social origin pay gap evidence base. Chapter 2 investigates whether recent empirical studies have underestimated the social origin pay gap by omitting respondents with undefined social origins. Specifically, this relates to individuals that were not assigned a social origin because their household composition was not clear, nobody was earning in the household, or the occupational identity of the main wage earner could not be identified. Data from the Labour Force Survey (LFS) is analysed to establish the prevalence of undefined social origins and to what extent the socio-economic characteristics of those with undefined social origins are different from those who can be identified using the Standard Occupational Classification (SOC). We examine how omitting these groups affects estimates of social origin pay gaps. The results show that 10.5% of the working age population have undefined social origins and that the labour market outcomes of these people are on average much worse than those with defined social origins. Results show that omitting these respondents underestimates the range of the social origin pay gap and the number of people affected. This highlights that there is a further effect of parental association with the labour market or not clearly belonging to a household, which profoundly affects the life outcomes of a substantial share of the working age population.

Chapter 3 uses data from waves 1 to 9 of the United Kingdom Household Longitudinal Study (UKHLS) to examine the social origin pay gap and item non-response for social origin in relation to the pay gap. Following the dominance approach – proxying for respondents’ social origin via the ‘highest’ occupation of their parents when they were 14 – we observe a significant pay gap for those with undefined social origins in eight of the nine waves and a significant pay gap for those from NS-SEC 5 and NS-SEC 6 origins in seven waves. The pay gap is largest for those with undefined social origins in seven of the nine waves. When we examine the pay gap longitudinally, we find the pay gap is largest for those with undefined social origins, at 11.7%, followed by those from NS-SEC 7 origins at 11.2%. When we use total parental occupation as a proxy for social origin, we observe that the pay gap is generally larger for those from ‘lower’ social origins, particularly respondents whose parent(s) were economically inactive. This result supplements the findings from Chapter 2 in that individuals with undefined social origins report a larger pay gap compared to those with defined social origins. We observe similar results when we use parental education, total parental education, and highest parental occupation and highest parental education as proxies for social origin in that the pay gap is larger for respondents from ‘lower’ social origins. The results indicate the social origin pay gap may be larger when we consider both parents’ occupation and/or education.

Lastly, Chapter 4 uses a range of proxies for cultural capital and social capital in the UKHLS to examine how these impact social origin wage gaps. We observe significant pay gaps for all social origin groups, except those from NS-SEC 2 origins, after controlling for cultural capital, educational attainment, and a range of labour market observables. The pay gap is largest for those with undefined social origins at 8.9%, followed by those from NS-SEC 4 origins at 8.7%. This indicates that cultural capital does not fully explain the social origin pay gap and thus we consider respondents’ social networks. When we control for social capital, educational attainment, and respondents’ labour market features, we observe that the pay gap is significant for those from undefined and NS-SEC 4 to NS-SEC 7 origins. The pay gap is largest for respondents from NS-SEC 4 origins, at 8.3%, and is second largest for those with undefined social origins at 7.9%. This indicates that part of the wage disadvantage experienced by individuals from undefined and NS-SEC 4 to NS-SEC 7 origins is likely to represent the impact of unequal access to social capital. Overall, the results indicate social capital plays a role in explaining the social origin pay gap.

This thesis contributes to the social origin pay gap literature in three ways. Firstly, it examines the pay gaps for all survey respondents, including those with undefined social origins and highlights that omitting respondents with undefined social origins underestimates the magnitude of the social origin pay gap and the number of people affected. Secondly, it considers respondents’ parents’ occupational status and education to provide a more comprehensive proxy for respondents’ social origin to estimate class wage gaps. The results highlight significant pay gaps for those from routine and undefined social origins, indicating the pay gap is larger once we consider both parents’ occupational status and education, Thirdly, it uses a range of proxies for cultural capital and social capital to empirically examine to what extent these forms of capital play a role in explaining the social origin pay gap, the first study of its kind to do so. The results indicate that social capital plays a role in explaining the pay gap.