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Cross-National Differences in the Rise in Earnings Inequality: Market and Institutional Factors

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Author Info
Peter Gottschalk () (Boston College)
Mary Joyce (U.S. Bureau of Labor Statistics)

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Abstract

This paper uses data from the Luxembourg Income Study to explore the role of differences in supply shifts in explaining cross-national differences in the rise in earnings inequality. Changes in returns to age and education are estimated for eight countries using a common specification of earnings functions across years and countries. We find that the small overall increase in earnings inequality in many countries reflects large but offsetting changes in returns to skill and changes in inequality within age education cells. Furthermore, these differences in returns to skill can largely be explained by differences in supply shifts.

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Publisher Info
Paper provided by Boston College Department of Economics in its series Boston College Working Papers in Economics with number 366.

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Length: 35 pages
Date of creation: 01 May 1997
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Handle: RePEc:boc:bocoec:366

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Keywords: earnings inequality

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Find related papers by JEL classification:
J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Levy, Frank & Murnane, Richard J, 1992. "U.S. Earnings Levels and Earnings Inequality: A Review of Recent Trends and Proposed Explanations," Journal of Economic Literature, American Economic Association, vol. 30(3), pages 1333-81, September. [Downloadable!] (restricted)
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  5. Robert E. Baldwin & Glen G. Cain, 1997. "Shifts in U.S. Relative Wages: The Role of Trade, Technology and Factor Endowments," NBER Working Papers 5934, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  6. Fortin, Nicole M & Lemieux, Thomas, 1997. "Institutional Changes and Rising Wage Inequality: Is There a Linkage?," Journal of Economic Perspectives, American Economic Association, vol. 11(2), pages 75-96, Spring. [Downloadable!] (restricted)
  7. 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. [Downloadable!] (restricted)
  8. David Card & Francis Kramarz & Thomas Lemieux, 1996. "Changes in the Relative Structure of Wages and Employment: A Comparison of the United States, Canada, and France," NBER Working Papers 5487, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  9. Chinhui Juhn, 1994. "Wage Inequality and Industrial Change: Evidence from Five Decades," NBER Working Papers 4684, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  10. Bean, Charles R, 1994. "European Unemployment: A Survey," Journal of Economic Literature, American Economic Association, vol. 32(2), pages 573-619, June. [Downloadable!] (restricted)
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  11. Lawrence F. Katz & Gary W. Loveman & David G. Blanchflower, 1993. "A Comparison of Changes in the Structure of Wages," NBER Working Papers 4297, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  12. Nickell, Stephen & Bell, Brian, 1996. "Changes in the Distribution of Wages and Unemployment in OECD Countries," American Economic Review, American Economic Association, vol. 86(2), pages 302-08, May. [Downloadable!] (restricted)
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    Other versions:
  14. Borland, Jeff & Wilkins, Roger, 1996. "Earnings Inequality in Australia," The Economic Record, The Economic Society of Australia, vol. 72(216), pages 7-23, March.
    Other versions:
  15. Richard B. Freeman & Karen Needels, 1991. "Skill Differentials in Canada in an Era of Rising Labor Market Inequality," NBER Working Papers 3827, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  16. Blank, Rebecca M, 1995. "Changes in Inequality and Unemployment over the 1980s: Comparative Cross-National Responses," Journal of Population Economics, Springer, vol. 8(1), pages 1-21, February.
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  18. Baldwin, Robert E & Cain, Glen C, 1997. "Shifts in US Relative Wages: The Role of Trade, Technology and Factor Endowments," CEPR Discussion Papers 1596, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  19. Gottschalk, Peter, 1997. "Inequality, Income Growth, and Mobility: The Basic Facts," Journal of Economic Perspectives, American Economic Association, vol. 11(2), pages 21-40, Spring. [Downloadable!] (restricted)
  20. Francine D. Blau & Lawrence M. Kahn, 1996. "International Differences in Male Wage Inequality: Institutions versus Market Forces," NBER Working Papers 4678, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Daniele Checchi & Jelle Visser & Herman G. van de Werfhorst, 2007. "Inequality and Union Membership: The Impact of Relative Earnings Position and Inequality Attitudes," IZA Discussion Papers 2691, Institute for the Study of Labor (IZA). [Downloadable!]
  2. Pavlopoulos, Dimitris & Muffels, Ruud & Vermunt, Jeroen-K., 2005. "Wage Mobility in Europe. A Comparative Analysis Using restricted Multinomial Logit Regression," MPRA Paper 229, University Library of Munich, Germany. [Downloadable!]
  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. repec:ese:iserwp: is not listed on IDEAS
  5. Patrick A. Puhani, 2005. "Relative Supply and Demand for Skills in Switzerland," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 127(IV), pages 555-584, December. [Downloadable!]
  6. Futoshi Yamauchi-K., 2000. "Labor Earnings Inequality and Learning About Individual Ability: Theory and Evidence from Japan and the United States," Econometric Society World Congress 2000 Contributed Papers 0782, Econometric Society. [Downloadable!]
  7. Kalwij, Adriaan S. & Alessie, Rob, 2003. "Permanent and Transitory Wage Inequality of British Men, 1975-2001: Year, Age and Cohort Effects," IZA Discussion Papers 686, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  8. Jeff Borland, 2000. "Economic Explanations of Earnings Distribution Trends in the International Literature and Application to New Zealand," Treasury Working Paper Series 00/16, New Zealand Treasury. [Downloadable!]
  9. Barrett, Alan & Fitz Gerald, John & Nolan, Brian, 2000. "Earnings Inequality, Returns to Education and Immigration into Ireland," CEPR Discussion Papers 2493, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  10. Michael R. Smith, 2001. "Technological Change, the Demand for Skills, and the Adequacy of their Supply," Canadian Public Policy, University of Toronto Press, vol. 27(1), pages 1-22, March. [Downloadable!] (restricted)
  11. Daron Acemoglu, 2003. "Cross-Country Inequality Trends," Economic Journal, Royal Economic Society, vol. 113(485), pages F121-F149, February. [Downloadable!] (restricted)
    Other versions:
  12. Timothy M. Smeeding, 2002. "Globalization, Inequality, and the Rich Countries of the G-20: Evidence from the Luxembourg Income Study (LIS)," Center for Policy Research Working Papers 48, Center for Policy Research, Maxwell School, Syracuse University. [Downloadable!]
  13. Jose Varejao & Anabela Carneiro, 2005. "Plant Turnover and the Evolution of Regional Inequalities," ERSA conference papers ersa05p709, European Regional Science Association. [Downloadable!]
  14. Richard V. Burkhauser & Shuaizhang Feng & Stephen P. Jenkins, 2007. "Using the P90/P10 Index to Measure US Inequality Trends with Current Population Survey Data: A View from Inside the Census Bureau Vaults," IZA Discussion Papers 2839, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  15. Emmanuel Skoufias & Asep Suryahadi, 1999. "Growth and Crisis Impact on Formal Sector Wages in Indonesia," Labor Economics Working Papers 91, East Asian Bureau of Economic Research. [Downloadable!]
  16. Alena Bicakova, 2006. "Market vs. Institutions: The Trade-off Between Unemployment and Wage Inequality Revisited," Economics Working Papers ECO2006/31, European University Institute. [Downloadable!]
  17. Christopher Niggle, 2003. "Globalization, Neoliberalism and the attack on social security," Review of Social Economy, Taylor and Francis Journals, vol. 61(1), pages 51-71, March. [Downloadable!] (restricted)
  18. Puhani, Patrick A., 2003. "A Test of the ‘Krugman Hypothesis’ for the United States, Britain, and Western Germany," ZEW Discussion Papers 03-18, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
    Other versions:
  19. Daniel Parent, 1999. "Labour Market Outcomes and Schooling in Canada: Has the Value of a High School Degree Changed over Time?," CIRANO Working Papers 99s-42, CIRANO. [Downloadable!]
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