Wage differentials across sectors in Europe

Using a unique harmonized linked employer–employee dataset, this paper analyses the structure and determinants of inter‐industry wage differentials in Central and Eastern European countries (Czech Republic, Latvia, Lithuania and Poland) and compares them to those observed in Western European states. Findings show substantial differences in earnings across sectors in all countries, even when controlling for a wide range of employee, job and employer characteristics. The hierarchy of sectors in terms of wages appears to be quite similar in Eastern and Western European countries, although the former tend to have higher levels of dispersion of inter‐industry wage differentials.     

Prices,Productivity and Wage Bargaining in Open Economies*

According to the standard union bargaining model, unemployment benefits should have big effects on wages, but product‐market prices and productivity should play no role in the wage bargain. We formulate an alternative strategic bargaining model, where labour and product‐market conditions together determine wages. A wage equation is derived and estimated on aggregate data for four Nordic countries. Wages are found to depend not only on unemployment and the replacement ratio, but also on productivity, international prices and exchange rates. There is evidence of considerable nominal wage rigidity. Exchange rate changes have large and persistent effects on competitiveness.     

Inequality of Opportunity in Europe

Using the EU‐SILC database, we estimate and compare the Inequality of Opportunity (IO) of 23 European countries in 2005. IO is estimated as the between‐type (ex‐ante) inequality component following the parametric procedure of Ferreira and Gignoux (2011 ), which allows for the inclusion of the large set of circumstances in the database. We also measure the degree of correlation between IO estimates and a set of past and contemporaneous economic factors related to the degree of development, labor market performance, investment in human capital, and social protection spending.     

Heterogeneous Wage Effects of Apprenticeship Training*

The relatively small average wage effects of employer and occupation changes after apprenticeship training mask large differences between occupation groups and apprentices with different schooling backgrounds. People who change employer and occupation within industrial occupations enjoy large wage advantages, whereas apprentices in commerce and trading occupations, as well as in construction and crafts occupations, face wage losses from an occupation change. The differences between the firms that provide the apprenticeship training are found to be small or insignificant. In this paper, we reconcile the differences between previous findings by comparing and replicating the empirical estimation strategies used. This demonstrates that selectivity in occupations and changes, unobserved heterogeneity between occupations, and sample selection do matter.     

Measuring the Consistency of Cross‐Sectional and Longitudinal Income Information in EU‐SILC

The EU‐wide survey “Statistics on Income and Living Conditions” (EU‐SILC) is extremely important for international social science research and policy advice. It is therefore crucial to ensure that the data are of the highest quality and international comparability. This paper is aimed at identifying unexpected developments in income levels, income mobility, and inequality in the EU‐SILC data between 2005 and 2009. We examine the consistency of EU‐SILC by comparing cross‐sectional results with findings based on two‐year longitudinal samples. Although the data represent similar populations, for several countries the results of this comparison differ widely. One important outcome is the high degree of variability over time in countries that obtain their income information from register data. This suggests methodological challenges in the clear designation of new subsample members, in the reweighting of the data, in imputation of missing values, and in other areas.     

General Purpose Technology and Wage Inequality

The recent changes in the US wage structure are often linked to the new wave of capital-embodied information technologies. The existing literature has emphasized either the accelerated pace or the skill-bias of embodied technical progress as the driving force behind the rise in wage inequality. A key, neglected, aspect is the general purpose nature of the new information technologies. This paper formalizes the idea of generality of technology in two ways, one related to human capital (skill transferability) and one to physical capital (vintage compatibility) and studies the impact of an increase in these two dimensions of technological generality on equilibrium wage inequality.     

Trade Liberalization and Gender Wage Inequality in Mexico

Abstract

After twenty years of trade liberalization in Mexico, the relationship between gender wage inequality and trade remains insufficiently studied, in spite of evidence of increasing numbers of women in industrial employment. This study aims to analyze the effects of export orientation and other characteristics that represent the industrial underpinnings of restructuring on gender wage inequality for 2001–5. There is consistent evidence of the negative impact of export orientation on men's and women's wages and the gender wage ratio, signifying that women lose in both absolute and relative terms. This result holds after controlling for women's share of employment and the skills of both genders, contrary to the expected effect from trade on equality. There is also a negative relation between a rise in the proportion of unskilled workers and the gender wage ratio, which suggests that the trade-induced skill hypothesis cannot be considered an adequate explanation for gender inequality.     

Income Mobility and Income Inequality in Rural China

The economic literature has argued for a long time that income mobility could attenuate the degree of cross-sectional inequality by offering people opportunities to improve their socio-economic position. Using the longitudinal data from the China Health and Nutrition Survey (CHNS) from 1989 to 2011, we measure income mobility as the degree to which longer-term incomes are distributed more or less equally than yearly income. Five main results are emphasized. First, there is strong income mobility in rural China that partly offsets yearly income inequality. Second, income mobility has decreased since the 2000s, indicating that income distribution is becoming more rigid. Third, mobility is mainly associated with transitory income fluctuations, particularly in the two tails of the distribution. Fourth, income mobility has an equalizing effect on income distribution. Fifth, we show that non-agricultural income mobility has substantially increased over the period and that its equalizing nature has also recently increased. While the development of the non-agriculture sector in rural China was a crucial factor in explaining the increase in rural inequality until the mid-2000s, we suggest that the large-scale generalisation of such non-agricultural opportunities partly accounts for the decline in rural inequality observed since the mid-2000s.     

The Perception of Inequality of Opportunity in Europe

Does the way in which scholars measure inequality of opportunity correspond to how people perceive it? What other factors influence individual perception of this phenomenon? To answer these questions, we must first clarify how scholars define and measure inequality of opportunity. We discuss the possible mechanisms linking objective measures to subjective perception of the phenomenon, then propose a measure of perceived inequality of opportunity, and finally test our hypothesis by merging data from two sources: the European Union Statistics on Income and Living Conditions (2011) and the International Social Survey Programme (2009). We suggest that the prevailing perception of the degree of unequal opportunity in a large sample of respondents is only weakly correlated with its objective measure. We estimate a multilevel model considering both individual‐ and country‐level controls to explain individual perception of unequal opportunity. Our estimates suggest that the two most adopted measures of inequality of opportunity have no clear role in explaining its perception. Conversely, other country‐level variables and personal experiences of intergenerational social mobility are important determinants of how inequality of opportunity is perceived.     

Wage Rigidity,Inflation, and Institutions

We study the possible existence of downward nominal wage rigidity (DNWR) at wage growth rates different from zero in aggregate data. Even if DNWR prevails at zero for individual workers, compositional effects might lead to falling aggregate wages, while changes in relative wages combined with DNWR might lead to positive aggregate wage growth. We explore industry data for 19 OECD countries, over the 1971–2006 period. We find evidence for a floor on nominal wage growth at 6 percent in the 1970s and 1980s, at 1 percent in the 1990s, and at 0.5 percent in the 2000s. Furthermore, we find that DNWR is stronger in country‐years with strict employment protection legislation, high union density, centralized wage setting, and high inflation.     

Literacy and the Migrant–Native Wage Gap

Being able to read and write is one of the most important skills in modern economies. Literacy frequently is a prerequisite for employment and its relevance for productivity and wages is magnified by the fact that it is only through literacy that many other skills become usable. More so than for natives, this argument applies to migrants: even those with high levels of human capital acquired in the country of origin often have it rendered worthless by the absence of literacy in the host‐country language. Using novel data from a large‐scale German adult literacy test (“leo.—Level‐One Studie”, or “LEO”), we investigate the determinants of literacy and show that migrants have systematically lower language skills than natives. We find that any observed raw employment and wage gaps between natives and migrants can be fully explained by these differences.     

Changes in Job Structure and Rising Wage Inequality in Urban China, 1995-2007

We use household surveys from 1995, 2002, and 2007 to examine how changes in job structure contributed to China’s rising urban wage inequality, considering three job characteristics: occupation, industry, and firm ownership. The explanatory power of job structure for wage inequality increased between 1995 and 2007. Both the change in relative number of jobs (composition effect) and the change in between-job and within-job wage gaps (price effect) contributed to rising wage inequality. Price effect was the major contributor, whereas composition effect played a larger role in the 1995–2002 period than in the 2002–2007 period, and at the lower-half distribution. Between-job inequality played a major role in the first period, and within-job inequality played a major role in the second period. Our results suggest that both technological change and institutional features influence job structure and wage inequality.     

Wage and employment effects of a wage norm

Most transition countries used tax‐supported wage norms in the early 1990s, as a part of their market liberalization programmes. This article analyses how a firm‐level tax (or subsidy) on deviations from a pre‐set wage norm may promote employment by rotating the labour demand curve perceived by the workers’ union around the value of the norm. We derive the conditions under which it yields a positive employment effect. We test the effect of the norm on the wages on a sample of Polish firms in 1990 and 1991. The data support the role of the wage norm on the position of the perceived labour demand curve and the role of the tax rate on its slope.     

The Rise and Fall of Centralized Wage Bargaining

During the three decades spanning the early 1950s to the early 1980s, the wage‐setting process in most Northern European countries was dominated by centralized bargaining (i.e., peak‐level labor and employer associations set wages nationwide). In the early 1980s, centralized wage bargaining began to collapse. In this paper, we assess a novel explanation for both the initial establishment of a centralized wage‐setting process, and its subsequent collapse. According to our theory, centralized wage bargaining was set up as a response to the spillovers created by the unemployment benefit program. Its collapse was the result of the increase in the productivity gap across workers, brought about by equipment‐specific technological progress and equipment–skill complementarity.     

Wage bargaining and inflation

This paper investigates the issue of time inconsistency of monetary policy in a game with perfect information and infinite repetitions. The private sector is described by a wage negotiation process between a labour union and a firm. Unlike in the standard literature, the model has the feature that as the distortion of the economy gets larger, namely as the bargaining power of the union increases, the reputational equilibrium with low inflation becomes more likely to occur. This finding is consistent with the observation that higher levels of the labour cost are not typically associated with higher levels of inflation.     

再生产抑或循环:女性的职业阶层不平等与社会流动研究

当前我国社会职业阶层结构的开放对于男性和女性有着不同的意义,代际和代内社会职业阶层流动表明,女性的总流动率和上升流动率均低于男性,女性更多地受到父代尤其是母亲职业地位的影响,而男性则更容易通过自身努力从较低的社会职业阶层跻身到职业地位的上层。由此我们可以理解尽管社会流动率在增加,但是女性与男性的社会地位仍存在着较大的差距。     

Trade Liberalization and Wage Inequality: Evidence from the U.S. States

This paper examines the relationship between trade liberalization and wage inequality for 50 U.S. states during the period from 1999 to 2008. The Difference-in-Differences and fixed effects methods are employed to evaluate the effect of trade liberalization on wage inequality in the U.S. states. Empirical results reveal that trade liberalization and de-unionization do increase the wage inequality between skilled and unskilled workers. Evidence shows skill-biased technological change has no significant impact on rising wage inequality. As Difference-in-Differences estimation on time-series cross sectional data involves many years, the conventional standard errors often understate the standard deviation of the estimators. This paper employs the standard bootstrapping procedure and the clustering error procedure to correct the problem, and all sign patterns still hold.     

Long-run costs of piecemeal reform: Wage inequality and returns to education in Vietnam

In this paper, we examine changes in wage structure and wage premia during Vietnam’s transition from command to market economy. Relative to other work in this literature, our paper is unique in that we identify the policies that lead to such changes. By examining skill premium trends along the two dimensions of particular importance to the transition—state or non-state firms, and traded or non-traded industries—we are able to separate the contribution of external liberalization to wage growth and rising skill premia from that of domestic labor market reforms, and to examine potential interactions between the two types of reform. The results point to the high cost of incomplete reform in Vietnam. Capital market segmentation creates a two-track market for skills, in which state sector workers earn high salaries while non-state workers face lower demand and lower compensation. Growth is reduced directly by diminished allocative efficiency and reduced incentives to acquire education, and indirectly by higher wage inequality and rents for workers with access to state jobs.     

CASH TRANSFERS,INTERGENERATIONAL MOBILITY,AND THE PROCESS OF DEVELOPMENT

We examine how cash transfers affect an individual's education investment, intergenerational mobility, and economic growth. We find that providing larger transfer amounts to higher ability children is desirable to foster growth if the economy has relatively low wage inequality.     

Intergenerational Earnings and Income Mobility in Spain

This paper contributes to the large number of studies on intergenerational earnings and income mobility by providing new evidence for Spain. Since there are no Spanish surveys covering long‐term information on both children and their fathers' income or earnings, we deal with this selection problem using the two‐sample two‐stage least squares estimator. We find that intergenerational mobility in Spain is similar to that in France, lower than in the Nordic countries and Britain, and higher than in Italy and the United States. Furthermore, we use the Chadwick and Solon approach to explore intergenerational mobility in the case of daughters and we find similar results by gender.