Small firms, contracting-out, computers and wage inequality: Evidence from UK manufacturing

What demand-side and institutional Factors raised the skilled wage premium over the 1980s in UK manufacturing? Using a panel of 80 industries over 1980-9, we find that (1) the average skill premium rose by around 13 percentage points; (2) computer introduction explains around 50% of this rise; (3) the growth in small firms and in contracting-out together explain around 20% of the rise; and (4) the fall in unionization explains around 15% of the rise.