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Changes in the wage structure in EU countries

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Abstract

We study changes in the wage structures in nine EU countries over 1995-2002 and the role of demand, supply and institutional developments in shaping these changes. Using comparable cross-country microeconomic data, we compute for each country and at each decile of the wage distribution, the part of the observed wage change that is due to changes in the composition of workers, employers, and jobs’ characteristics, and the part due to changes in the returns to these characteristics. We find that composition effects derived from changes in age, gender or education of the labour force, largely exogenous to economic developments, had a minor contribution to the observed wage dynamics. In contrast, return and composition effects from characteristics likely driven by economic developments are found most relevant to explain the observed changes. We relate wages and their various components with macroeconomic and institutional trends and find that technology and globalisation are associated with wage increases; migration is associated with declines in wages; whereas the effect of labour market institutions has been mixed. JEL Classification: J31.

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Bibliographic Info

Paper provided by European Central Bank in its series Working Paper Series with number 1199.

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Length: 37 pages
Date of creation: May 2010
Date of revision:
Handle: RePEc:ecb:ecbwps:20101199

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Keywords: Wage Structure; Quantile Regressions.;

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  1. Philip Du Caju & Gábor Kátay & Ana Lamo & Daphne Nicolitsas & Steven Poelhekke, 2010. "Inter-industry wage differentials in EU countries: what do cross-country time varying data add to the picture?," Working Papers 121, Bank of Greece.
  2. Dustmann, C. & Ludsteck, J. & Schonberg, U., 2009. "Revisiting the German wage structure," Open Access publications from University College London http://discovery.ucl.ac.u, University College London.
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  1. ¿Vale la pena estudiar? (VI) La inusual caída de la ganancia salarial resultante de la educación avanzada
    by Luis Garicano in Nada Es Gratis on 2010-12-08 23:30:40
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Cited by:
  1. Rebekka Christopoulou & Theodora Kosma, 2009. "Skills and Wage Inequality in Greece: Evidence from Matched Employer-Employee Data, 1995-2002," GreeSE – Hellenic Observatory Papers on Greece and Southeast Europe 26, Hellenic Observatory, LSE.
  2. Wolfgang Pointner & Alfred Stiglbauer, 2010. "Changes in the Austrian structure of wages, 1996–2002: evidence from linked employer-employee data," Empirica, Springer, vol. 37(2), pages 105-125, May.
  3. Bergin, Adele & Kelly, Elish & McGuinness, Seamus, 2012. "Explaining Changes in Earnings and Labour Costs During the Recession," Papers EC9, Economic and Social Research Institute (ESRI).
  4. Raquel Carrasco & Juan F. Jimeno & A. Carolina Ortega, 2011. "Accounting for changes in the Spanish wage distribution: the role of employment Composition effects," Banco de España Working Papers 1120, Banco de España.
  5. Andrea Brandolini & Alfonso Rosolia & Roberto Torrini, 2011. "The distribution of employees’ labour earnings in the European Union: Data, concepts and first results," Working Papers 198, ECINEQ, Society for the Study of Economic Inequality.

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