Declining returns to skill and the distribution of wages : Spain 1995-2006
AbstractIn contrast to the pattern observed in other developed countries, Spanish wage inequality did not increase during the period from 1995-2006. In this paper we analyse the relative role of supply and demand factors when accounting for this “atypical” fact. Because noticeable changes in both labour supply and labour demand - such as educational upgrading of the labour force, huge immigration flows, and a boom in the construction sector - took place during these years, we start by decomposing observed wage changes into changes in the composition of the labour force and changes in the prices of workers’ and jobs’ characteristics. The results indicate that the compression of the wage distribution is largely explained by a decrease in the returns to education. We also provide some evidence of the relative impact of labour supply and labour demand factors on the changes of these returns, showing that both the increase in the supply of high-skilled workers and the increasing weight of low-skilled occupations are related to the decreasing trend in the skill premium over this period.
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Bibliographic InfoPaper provided by Universidad Carlos III, Departamento de Economía in its series Economics Working Papers with number we1231.
Date of creation: Nov 2012
Date of revision:
Wage structure; Quantile regressions; Composition effects; Polarization;
Find related papers by JEL classification:
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-12-06 (All new papers)
- NEP-EUR-2012-12-06 (Microeconomic European Issues)
- NEP-LAB-2012-12-06 (Labour Economics)
- NEP-LMA-2012-12-06 (Labor Markets - Supply, Demand, & Wages)
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