Wealthy Scots see fastest income growth

Scotland’s top one per cent of income earners – about 25,000 people – have increased their wages and total income at a greater rate than the rest of the nation’s workers in the past decade, according to a new report by a team at Stirling University.

Key points

  • Someone in the top one per cent income bracket in Scotland can now expect to earn 20 times more than someone in the bottom one per cent.
  • Inequality in Scotland is lower than in the rest of the UK, but only because of particularly high levels of inequality in London.
  • Inequality is high in Scotland relative to other developed countries, and especially the Nordic countries. But since the late 1990s, net income inequality (after taxes and benefits have been taken into account) has tended to increase somewhat faster in the Nordic countries than it has in Scotland.
  • Much of the increase in wage inequality in Scotland has been driven by increased part-time working. This is particularly the case in lower-paying occupations.
  • Another important factor has been the changing job market: the share of both higher-paying and lower-paying jobs increased between 2001 and 2010, whereas the share of middle-wage jobs fell as a result of technological change and globalisation.
  • Once taxes and benefits are taken into account, overall household income inequality in Scotland has not increased substantially since the mid-1990s. This is because the UK-wide tax and benefit system transfers more income from higher-income to lower-income households than in the average developed country.

The report was designed to inform the current debate on Scottish independence. One of the authors, Professor David Bell, said: 'Inequality in Scotland, like in many developed nations, is partly being driven by technology, by trade, and even by how we decide to form households. So, there are likely to be limits to the extent that a small open economy can reduce inequality. Scottish independence would provide opportunities, but the constraints that already exist would not go away'.

Source: David Bell and David Eiser, Inequality in Scotland: Trends, Drivers, and Implications for the Independence Debate, Economic and Social Research Council
LinksReport | ESRC press release | BBC report | Scotsman report

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Publication date: 
Nov 15 2013