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Wage Dispersion Between and Within Plants: Sweden 1985-2000

In: The Structure of Wages: An International Comparison

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  • Oskar Nordström Skans
  • Per-Anders Edin
  • Bertil Holmlund

Abstract

The paper describes the Swedish wage distribution and how it correlates with worker mobility and plant-specific factors. It is well known that wage inequality has increased in Sweden since the mid-1980s. However, little evidence has so far been available as to whether this development reflects increased dispersion between plants, between individuals in the same plant, or both. We use a new linked employer-employee data set and discover that a trend rise in between-plant wage inequality account for the entire increase in wage dispersion. This pattern, which remains when we control for observable individual human capital characteristics, may reflect increased sorting of workers by skill levels and/or increased scope for rent sharing in local wage negotiations. Our discussion suggests that both factors may have become more important.

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This chapter was published in:

  • Edward P. Lazear & Kathryn L. Shaw, 2009. "The Structure of Wages: An International Comparison," NBER Books, National Bureau of Economic Research, Inc, number laze08-1, May.
    This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 2372.

    Handle: RePEc:nbr:nberch:2372

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    1. Edin, P.-A. & Fredriksson, P., 2000. "LINDA - Longitudinal INdividual DAta for Sweden," Papers 2000:19, Uppsala - Working Paper Series.
    2. Michael Kremer & Eric Maskin, 1996. "Wage Inequality and Segregation by Skill," NBER Working Papers 5718, National Bureau of Economic Research, Inc.
    3. Forslund, Anders, 1994. "Wage Setting at the Firm Level--Insider versus Outsider Forces," Oxford Economic Papers, Oxford University Press, vol. 46(2), pages 245-61, April.
    4. Bertil Holmlund & Donald Storrie, 2002. "Temporary Work In Turbulent Times: The Swedish Experience," Economic Journal, Royal Economic Society, vol. 112(480), pages F245-F269, June.
    5. Holmlund, B. & Zetterberg, J., 1989. "Insider Effects In Wage Determination: Evidence From Five Countries," Papers 1989a, Uppsala - Working Paper Series.
    6. Per-Anders Edin & Bertl Holmlund, 1993. "The Swedish Wage Stucture: The Rise and Fall of Solidarity Wage Policy?," NBER Working Papers 4257, National Bureau of Economic Research, Inc.
    7. Michael Kremer & Eric Maskin, 1996. "Wage Inequality and Segregation," Harvard Institute of Economic Research Working Papers 1777, Harvard - Institute of Economic Research.
    8. Bertil Holmlund, 2003. "The Rise and Fall of Swedish Unemployment," CESifo Working Paper Series 918, CESifo Group Munich.
    9. Susan N. Houseman, 2001. "Why employers use flexible staffing arrangements: Evidence from an establishment survey," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 55(1), pages 149-170, October.
    10. Richard B. Freeman & Lawrence F. Katz, 1995. "Differences and Changes in Wage Structures," NBER Books, National Bureau of Economic Research, Inc, number free95-1, May.
    11. Timothy Dunne & Lucia Foster & John Haltiwanger & Kenneth R. Troske, 2004. "Wage and Productivity Dispersion in United States Manufacturing: The Role of Computer Investment," Journal of Labor Economics, University of Chicago Press, vol. 22(2), pages 397-430, April.
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