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Explaining international differences in male skill wage differentials by differences in demand and supply of skill

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Author Info
Edwin Leuven
Hessel Oosterbeek
Hans van Ophem

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Abstract

This paper explores the hypothesis that wage differentials between skill groups across countries are consistent with a demand and supply framework. Using micro data from 15 countries we find that about one third of the variation in relative wages between skill groups across countries is explained by differences in net supply of skill groups. The demand and supply framework does an even better job at explaining relative wages of low skilled workers. Copyright 2004 Royal Economic Society.

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Article provided by Royal Economic Society in its journal The Economic Journal.

Volume (Year): 114 (2004)
Issue (Month): 495 (04)
Pages: 466-486
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Handle: RePEc:ecj:econjl:v:114:y:2004:i:495:p:466-486

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  1. Dohmen, Thomas J & Falk, Armin & Huffman, David & Sunde, Uwe, 2007. "Are Risk Aversion and Impatience Related to Cognitive Ability?," CEPR Discussion Papers 6398, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  2. Arnaud Dupuy & Lex Borghans, 2005. "Supply and demand, allocation and wage inequality: an international comparison," Applied Economics, Taylor and Francis Journals, vol. 37(9), pages 1073-1088, May. [Downloadable!] (restricted)
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  3. Ioannis Cholezas & Panos Tsakloglou, 2007. "Earnings Inequality in Europe: Structure and Patterns of Inter-Temporal Changes," IZA Discussion Papers 2636, Institute for the Study of Labor (IZA). [Downloadable!]
  4. Matthias Weiss & Alfred Garloff, 2005. "Skill Biased Technological Change and Endogenous Benefits: The Dynamics of Unemployment and Wage Inequality," MEA discussion paper series 05100, Mannheim Research Institute for the Economics of Aging (MEA), University of Mannheim. [Downloadable!]
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  5. Erling Barth & Claudio Lucifora, 2006. "Wage Dispersion, Markets and Institutions: The Effects of the Boom in Education on the Wage Structure," IZA Discussion Papers 2181, Institute for the Study of Labor (IZA). [Downloadable!]
  6. Bianchi, Milo, 2006. "Immigration Policy and Self-Selecting Migrants," Working Paper Series in Economics and Finance 627, Stockholm School of Economics, revised 02 Nov 2006. [Downloadable!]
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  7. Pereira, Pedro Telhado & Martins, Pedro Silva, 2000. "Does Education Reduce Wage Inequality? Quantile Regressions Evidence from Fifteen European Countries," IZA Discussion Papers 120, Institute for the Study of Labor (IZA). [Downloadable!]
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  8. Daron Acemoglu, 2003. "Cross-Country Inequality Trends," Economic Journal, Royal Economic Society, vol. 113(485), pages F121-F149, February. [Downloadable!] (restricted)
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  9. Koeniger, Winfried & Leonardi, Marco & Nunziata, Luca, 2004. "Labour Market Institutions and Wage Inequality," IZA Discussion Papers 1291, Institute for the Study of Labor (IZA). [Downloadable!]
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  10. Richard Nahuis & Henri de Groot, . "Rising Skill Premia: You ain't seen nothing yet?," CPB Discussion Papers 20, CPB Netherlands Bureau for Economic Policy Analysis. [Downloadable!]
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  11. Hipolito , Simon, 2008. "International Differences in Wage Inequality: A New Glance with European Matched Employer-Employee Data," MPRA Paper 7932, University Library of Munich, Germany. [Downloadable!]
  12. Patrinos, Harry Anthony, 2008. "Quality of schooling, returns to schooling and the 1981 vouchers reform in Chile," Policy Research Working Paper Series 4617, The World Bank. [Downloadable!]
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  14. Simone Bertoli & Francesco Farina, 2007. "The functional distribution of income: a review of the theoretical literature and of the empirical evidence around its recent pattern in European countries," Department of Economic Policy, Finance and Development (DEPFID) University of Siena 005, Department of Economic Policy, Finance and Development (DEPFID), University of Siena. [Downloadable!]
  15. Büchel, Felix & Pollmann-Schult, Matthias, 2001. "Overeducation and Skill Endowments: The Role of School Achievement and Vocational Training Quality," IZA Discussion Papers 337, Institute for the Study of Labor (IZA). [Downloadable!]
  16. Blau, Francine & Kahn, Lawrence, 2004. "Do Cognitive Test Scores Explain Higher U.S. Wage Inequality?," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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  17. Claudio Lucifora, . "Wage Inequalities and Low Pay: The Role of Labour Market Institutions," Working Papers 1999.13, Fondazione Eni Enrico Mattei. [Downloadable!]
  18. Dan Devroye & Richard B. Freeman, 2001. "Does Inequality in Skills Explain Inequality in Earnings Across Advanced Countries?," NBER Working Papers 8140, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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