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Wage inequality in the Netherlands: Evidence, trends and explanations

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  • Stefan Groot

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  • Henri de Groot

    ()

Abstract

Using detailed micro data on the entire wage distribution in the Netherlands, this paper examines trends in Dutch (real pre-tax) wage inequality between 2000 and 2008. For many years, the Netherlands has been considered an exception to the general trend of growing wage inequality that most OECD countries have experienced since the 1980s. This OECD trend is generally explained by increasing relative demand for skilled labour due to skill biased technological progress and – to a lesser extent – by globalization. Using detailed micro data on the entire wage distribution in the Netherlands, this paper examines trends in Dutch (real pre-tax) wage inequality between 2000 and 2008. We show that the aggregate flatness of the distribution hides dynamics between different groups and regions. We find that inequality, after correcting for observed worker characteristics, decreased somewhat at the lower half of the wage distribution, while increasing slightly at most of the upper half (both before and after correcting for differences in human capital). Residual wage inequality is high and increasing in most larger cities, which is in line with recent evidence on the increasing importance of agglomeration externalities.

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Bibliographic Info

Paper provided by CPB Netherlands Bureau for Economic Policy Analysis in its series CPB Discussion Paper with number 186.

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Date of creation: Jul 2011
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Handle: RePEc:cpb:discus:186

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  1. Wim Suyker & Henri de Groot, 2006. "China and the Dutch economy," CPB Document, CPB Netherlands Bureau for Economic Policy Analysis 127, CPB Netherlands Bureau for Economic Policy Analysis.
  2. Stephen Gibbons & Henry G. Overman & Panu Pelkonen, 2010. "Wage disparities in Britain: people or place?," LSE Research Online Documents on Economics, London School of Economics and Political Science, LSE Library 30845, London School of Economics and Political Science, LSE Library.
  3. Katz, Lawrence F & Murphy, Kevin M, 1992. "Changes in Relative Wages, 1963-1987: Supply and Demand Factors," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 107(1), pages 35-78, February.
  4. Jean-Marc Burniaux & Flavio Padrini & Nicola Brandt, 2006. "Labour Market Performance, Income Inequality and Poverty in OECD countries," OECD Economics Department Working Papers 500, OECD Publishing.
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  7. Richard Nahuis & Henri de Groot, 2003. "Rising skill premia; you ain't seen nothing yet?," CPB Discussion Paper, CPB Netherlands Bureau for Economic Policy Analysis 20, CPB Netherlands Bureau for Economic Policy Analysis.
  8. Stefan Groot & Henri de Groot & Martijn Smit, 2011. "Regional wage differences in the Netherlands: Micro-evidence on agglomeration externalities," CPB Discussion Paper, CPB Netherlands Bureau for Economic Policy Analysis 184, CPB Netherlands Bureau for Economic Policy Analysis.
  9. Rob Euwals & Marike Knoef & Daniel van Vuuren, 2007. "The trend in female labour force participation; what can be expected for the future?," CPB Discussion Paper, CPB Netherlands Bureau for Economic Policy Analysis 93, CPB Netherlands Bureau for Economic Policy Analysis.
  10. David H. Autor & Lawrence F. Katz & Melissa S. Kearney, 2008. "Trends in U.S. Wage Inequality: Revising the Revisionists," The Review of Economics and Statistics, MIT Press, vol. 90(2), pages 300-323, May.
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  13. Maarten Goos & Alan Manning, 2003. "Lousy and Lovely Jobs: the Rising Polarization of Work in Britain," CEP Discussion Papers, Centre for Economic Performance, LSE dp0604, Centre for Economic Performance, LSE.
  14. Anthony B. Atkinson & Wiemer Salverda, 2005. "Top Incomes In The Netherlands And The United Kingdom Over The 20th Century," Journal of the European Economic Association, MIT Press, MIT Press, vol. 3(4), pages 883-913, 06.
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Cited by:
  1. Wiemer Salverda & Christina Haas & Marloes Graaf-zijl & Bram Lancee & Natascha Notten & Tahnee Ooms, 2013. "GINI Country Report: Growing Inequalities and their Impacts in the Netherlands," GINI Country Reports, AIAS, Amsterdam Institute for Advanced Labour Studies netherlands, AIAS, Amsterdam Institute for Advanced Labour Studies.
  2. Semih Akcomak & Henri de Groot & Stefan Groot, 2013. "The impact of trade, offshoring and multinationals on job loss and job finding," CPB Discussion Paper, CPB Netherlands Bureau for Economic Policy Analysis 252, CPB Netherlands Bureau for Economic Policy Analysis.
  3. Mathijs Gerritsen & Jens Høj, 2013. "The Dutch Labour Market: Preparing for the Future," OECD Economics Department Working Papers 1012, OECD Publishing.
  4. van Sonsbeek, Jan-Maarten & Alblas, Ridwan, 2012. "Disability benefit microsimulation models in the Netherlands," Economic Modelling, Elsevier, Elsevier, vol. 29(3), pages 700-715.

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