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Diverging trends of wage inequality in Europe

Author

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  • João M R Pereira
  • Aurora Galego

Abstract

Since the middle/end of the 2000s wage inequality has increased in some European countries (such as Portugal or the UK) and decreased in others (especially in Hungary and Poland). In this article, we analyse the role of the minimum wage and of workers’ and firms’ observed characteristics behind these diverging trends in wage inequality. Our findings indicate that compositional changes as regards education are a key factor pushing up inequality in the majority of the countries, but particularly in Italy and Portugal. Other factors either contribute to increased or decreased inequality, specifically minimum wage changes, the percentage of non-native employees and native wage premiums. Minimum wage changes seem to be of crucial importance in Greece, Hungary and Poland. Finally, the presence of non-natives in the labour market is a key determinant in the UK, but also to some extent in Austria and Hungary.

Suggested Citation

  • João M R Pereira & Aurora Galego, 2019. "Diverging trends of wage inequality in Europe," Oxford Economic Papers, Oxford University Press, vol. 71(4), pages 799-823.
    • Handle: RePEc:oup:oxecpp:v:71:y:2019:i:4:p:799-823.
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    File URL: http://hdl.handle.net/10.1093/oep/gpy072
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    Cited by:

    1. Reuter, Christian & Kaufhold, Marc-André & Schmid, Stefka & Spielhofer, Thomas & Hahne, Anna Sophie, 2019. "The impact of risk cultures: Citizens' perception of social media use in emergencies across Europe," Technological Forecasting and Social Change, Elsevier, vol. 148(C).
    2. Francesco Bloise & Irene Brunetti & Valeria Cirillo, 2022. "Firm strategies and distributional dynamics: labour share in Italian medium-large firms," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 39(2), pages 623-655, July.
    3. Carlos Oliveira, 2022. "How is the Minimum Wage Shaping the Wage Disitribution: Bite, Spillovers, and Wage Inequality," GEE Papers 0160, Gabinete de Estratégia e Estudos, Ministério da Economia, revised May 2022.
    4. Högberg, Björn, 2021. "Educational stressors and secular trends in school stress and mental health problems in adolescents," Social Science & Medicine, Elsevier, vol. 270(C).
    5. Barbieri, Teresa, 2021. "Changes in the Italian wage distribution: the role of routine and social tasks," MPRA Paper 113407, University Library of Munich, Germany.
    6. Middleditch, Paul & Moindrot, Will & Rudkin, Simon, 2022. "Teaching with Twitter: An extension to the traditional learning environment," International Review of Economics Education, Elsevier, vol. 41(C).

    More about this item

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • D30 - Microeconomics - - Distribution - - - General
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution

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