Labour market institutions and skill premiums: an empirical analysis on the UK 1972-2002

This paper analyzes the links between labour market institutions and skill premiums in the UK, controlling for other explanatory variables such as market conditions, international trade and skill-biased technology. We find that the trade union decline in unskilled workers can explain more than half of degree premium’ increase over the period 1979-1998 in the private sector, while the overall effect of trade union on degree premiums is only one third during the same period. Decline of trade union has less significant effect on skill premiums in the public sector.