pay dispersion

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Is a measure of the range of pay which is used by economists as an indicator of inequality within the labour market. Pay or wage dispersion is most commonly expressed in terms of the ratio of the 90th to the 10th percentile of the wage distribution in a given national economy. Comparative research indicates that pay dispersion is influenced by two key features of national labour markets: it is lower where there is a high-trade union density and where the national system of pay determination is centrally coordinated through effective minimum wage provisions and a system of multi-employer collective bargaining. Pay dispersion has widened considerably in a number of developed economies in recent years, including New Zealand, the UK, and the USA, in large part because of the decline of trade unions and the deregulation of the labour market.

Subjects: Human Resource Management.

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