The Socio-Economics of Pay Rules

The dissertation at hand examines pay inequalities in contemporary capitalist societies, a phenomena that combines clear policy relevance and entrenched controversies between different schools of thought. It defends the thesis that pay inequalities are the result of socially constructed rules that cannot be ascribed exclusively to capitalist-rational interests. The empirical part of the dissertation focuses on inequalities between occupations and applies econometric methods to representative panel data from Germany and Belgium. Three empirical studies provide surprisingly thin evidence for conventional models of the determination of earnings. We notably show that the pay rules that differentiate occupational categories cannot be explained with (i) corresponding inequalities in relative marginal productivities or (ii) the asymmetric impact of technological change on differ- ent occupations. By contrast, the structure of occupational pay is significantly associated with the composition of occupations (e.g. changes in unionisation, gender ratios, or educational mix) and cross-country variations in the institutional configuration of labour markets. The dissertation therefore not only highlights the weak empirical footing of conventional wage theories but also socio-economic concepts and factual evidence that help to recalibrate the institutional analysis of earnings.