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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. 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.
    2. Aysit Tansel & Basak Dalgic & Aytekin Güven, 2014. "Wage Inequality and Wage Mobility in Turkey," ERC Working Papers 1414, ERC - Economic Research Center, Middle East Technical University, revised Nov 2014.
    3. Rohini Somanathan, 2016. "Group Inequality in Democracies: Lessons from Cross-National Experiences," Working Papers id:11335, eSocialSciences.
    4. Rohini Somanathan, 2016. "Group Inequality in Democracies: Lessons from Cross-National Experiences," Working Papers id:11335, eSocialSciences.

    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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