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Wage dispersion between and within plants: Sweden 1985-2000

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  • Nordström Skans, Oskar

    ()
    (IFAU - Institute for Labour Market Policy Evaluation)

  • Edin, Per-Anders

    ()
    (IFAU - Institute for Labour Market Policy Evaluation and Department of Economics, Uppsala University)

  • Holmlund, Bertil

    ()
    (Department of Economics, Uppsala University)

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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Bibliographic Info

Paper provided by IFAU - Institute for Evaluation of Labour Market and Education Policy in its series Working Paper Series with number 2006:9.

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Length: 58 pages
Date of creation: 29 Aug 2006
Date of revision:
Handle: RePEc:hhs:ifauwp:2006_009

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Keywords: Wage inequality; labour turnover;

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  1. Michael Kremer & Eric Maskin, 1996. "Wage Inequality and Segregation," Harvard Institute of Economic Research Working Papers 1777, Harvard - Institute of Economic Research.
  2. Holmlund, B. & Zetterberg, J., 1989. "Insider Effects In Wage Determination: Evidence From Five Countries," Papers 1989a, Uppsala - Working Paper Series.
  3. 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.
  4. Bertil Holmlund & Donald Storrie, 2002. "Temporary Work in Turbulent Times: The Swedish Experience," CESifo Working Paper Series 671, CESifo Group Munich.
  5. 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.
  6. Richard B. Freeman & Lawrence F. Katz, 1995. "Differences and Changes in Wage Structures," NBER Books, National Bureau of Economic Research, Inc, number free95-1.
  7. Michael Kremer & Eric Maskin, 1996. "Wage Inequality and Segregation by Skill," NBER Working Papers 5718, National Bureau of Economic Research, Inc.
  8. 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.
  9. Edin, P.-A. & Fredriksson, P., 2000. "LINDA - Longitudinal INdividual DAta for Sweden," Papers 2000:19, Uppsala - Working Paper Series.
  10. Holmlund, Bertil, 2003. "The Rise and Fall of Swedish Unemployment," Working Paper Series 2003:13, Uppsala University, Department of Economics.
  11. 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.
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