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Applying the Decomposition of the Foster and Wolfson Bipolarization Index to Earnings Functions

In: Inequality, Taxation and Intergenerational Transmission

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  • Elena Bárcena-Martin
  • Jacques Silber

Abstract

This chapter shows that the algorithm recently proposed to decompose the Foster and Wolfson bipolarization index by income sources (seeBárcena-Martin, Deutsch, & Silber, forthcoming) may be extended to break down wage bipolarization by its determinants. The chapter gives an empirical illustration comparing the determinants of wage bipolarization and inequality in various European countries in 2011, with a special focus on Portugal. In Portugal higher levels of education are the main source of bipolarization and inequality. Gender and working in the public sector are important determinants of bipolarization while age and having a temporary job are important determinants of inequality.

Suggested Citation

  • Elena Bárcena-Martin & Jacques Silber, 2018. "Applying the Decomposition of the Foster and Wolfson Bipolarization Index to Earnings Functions," Research on Economic Inequality, in: Inequality, Taxation and Intergenerational Transmission, volume 26, pages 63-88, Emerald Group Publishing Limited.
    • Handle: RePEc:eme:reinzz:s1049-258520180000026005
    DOI: 10.1108/S1049-258520180000026005
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    More about this item

    Keywords

    Bipolarization; earnings function; Foster and Wolfson polarization index; income sources; inequality; SILC data; D31; D63; J31;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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