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The labour market, income per capita and welfare in Europe: An overview of the last two decades

Author

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  • Raquel Sebastian

    (Universidad Complutense de Madrid (Spain), ICAE and EQUALITAS)

Abstract

Using PWT10 and EU-SILC, we analyse the relationship between income per capita, wage inequality and welfare for 30 European countries over the period 2004-2019. We found that there is a great divergence between European countries in terms of labour productivity, although this variable is strongly (positively) related to the average salary of the different European economies. Spain has experienced one of the largest increases in wage inequality in the last two decades, and the functioning of the labour market is not the only factor that explains this evolution in the short term. The countries with the highest income per capita have increased their well-being the most, while in Spain this variable has barely changed. Gains in the mean wage have been offset by rising wage inequality. In addition to being far from the labour productivity figures of our more developed neighbours, we have a convergence problem in wage inequality.

Suggested Citation

  • Raquel Sebastian, 2022. "The labour market, income per capita and welfare in Europe: An overview of the last two decades," EKONOMIAZ. Revista vasca de Economía, Gobierno Vasco / Eusko Jaurlaritza / Basque Government, vol. 101(01), pages 158-183.
    • Handle: RePEc:ekz:ekonoz:2022107
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    References listed on IDEAS

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    More about this item

    Keywords

    productivity; income per capita; wage inequality; welfare; Europe;
    All these keywords.

    JEL classification:

    • D30 - Microeconomics - - Distribution - - - General
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General

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