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Wage Inequality and Wage Mobility in Europe

Author

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  • Ronald Bachmann
  • Peggy Bechara
  • Sandra Schaffner

Abstract

Using data from the European Union Statistics on Income and Living Conditions (EU-SILC), this paper investigates wage inequality and wage mobility in Europe. Decomposing inequality into within and between group inequality, we analyse to what extent wage inequality and mobility can be explained by observable characteristics. Furthermore, we investigate which individual and household characteristics determine transitions within the wage distribution. Finally, we examine the importance of institutions for wage inequality, wage mobility, and wage transitions. We find that overall, mobility reduces wage inequality. While a large part of wage inequality is due to unobservable characteristics, the equalizing effect of mobility mainly occurs within groups. Furthermore, both personal and household characteristics play an important role for wage transitions. Finally, our findings reveal large cross-country differences across Europe, which are partly linked to the institutional set-up of the national labour markets.
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Suggested Citation

  • Ronald Bachmann & Peggy Bechara & Sandra Schaffner, 2016. "Wage Inequality and Wage Mobility in Europe," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 62(1), pages 181-197, March.
  • Handle: RePEc:bla:revinw:v:62:y:2016:i:1:p:181-197
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    File URL: http://hdl.handle.net/10.1111/roiw.12152
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    Cited by:

    1. Rohini Somanathan, 2016. "Group Inequality in Democracies: Lessons from Cross-national Experiences," Working papers 260, Centre for Development Economics, Delhi School of Economics.
    2. Aysit Tansel & Basak Dalgic & Aytekin Guven, 2014. "Wage Inequality and Wage Mobility in Turkey," Koç University-TUSIAD Economic Research Forum Working Papers 1419, Koc University-TUSIAD Economic Research Forum.
    3. Bachmann, Ronald & Bechara, Peggy & Vonnahme, Christina, 2017. "Occupational mobility in Europe: Extent, determinants and consequences," Ruhr Economic Papers 732, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    4. Coban, Mustafa, 2017. "Wage mobility, wage inequality, and tasks: Empirical evidence from Germany, 1984-2014," Discussion Paper Series 139, Julius Maximilian University of Würzburg, Chair of Economic Order and Social Policy.
    5. Berger, Melissa & Schaffner, Sandra, 2015. "A note on how to realize the full potential of the EU-SILC data," ZEW Discussion Papers 15-005, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.

    More about this item

    JEL classification:

    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • P52 - Economic Systems - - Comparative Economic Systems - - - Comparative Studies of Particular Economies

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