IDEAS home Printed from https://ideas.repec.org/a/kap/empiri/v46y2019i2d10.1007_s10663-017-9397-z.html
   My bibliography  Save this article

Exploring changes in the employment structure and wage inequality in Western Europe using the unconditional quantile regression

Author

Listed:
  • Rosalia Castellano

    () (University of Naples “Parthenope”)

  • Gaetano Musella

    () (University of Naples “Parthenope”)

  • Gennaro Punzo

    () (University of Naples “Parthenope”)

Abstract

The aim of this paper is to explore how shifts in employment structure affect earnings dynamics and wage inequality throughout the wage distribution in four European countries (France, Germany, Italy, and the United Kingdom). Through UQR on the EU-SILC data, the analysis achieves two purposes: (1) understanding the primary forces of the wage and wage inequality generating process; (2) evaluating the changes over time in the marginal quantile of wage distribution and the changes in inequality at different points of the distribution. The results highlight the role of the occupational patterns in wage dynamics. France and Germany show decreasing patterns of wage inequality, despite having opposite changes in wages. Their respective well-defined structures (upgrading of occupations and job polarisation) have an equalising effect on the wage distribution. The United Kingdom and Italy show increasing patterns of wage inequality although maintaining opposite changes in wages. While the relative upgrading in the United Kingdom has only slowed inequality growth, the more hybrid pattern of Italian employment structure has contributed to raise the overall inequality.

Suggested Citation

  • Rosalia Castellano & Gaetano Musella & Gennaro Punzo, 2019. "Exploring changes in the employment structure and wage inequality in Western Europe using the unconditional quantile regression," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 46(2), pages 249-304, May.
  • Handle: RePEc:kap:empiri:v:46:y:2019:i:2:d:10.1007_s10663-017-9397-z
    DOI: 10.1007/s10663-017-9397-z
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10663-017-9397-z
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. David Ashton & Francis Green, 1996. "Education, Training and the Global Economy," Books, Edward Elgar Publishing, number 914, September.
    2. Joseph STIGLITZ, 2013. "The global crisis, social protection and jobs," International Labour Review, International Labour Organization, vol. 152, pages 93-106, January.
    3. Alberto Alesina & Dani Rodrik, 1994. "Distributive Politics and Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 109(2), pages 465-490.
    4. Daniela Del Boca & Silvia Pasqua & Chiara Pronzato, 2009. "Motherhood and market work decisions in institutional context: a European perspective," Oxford Economic Papers, Oxford University Press, vol. 61(suppl_1), pages 147-171, April.
    5. Fortin, Nicole & Lemieux, Thomas & Firpo, Sergio, 2011. "Decomposition Methods in Economics," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.),Handbook of Labor Economics, edition 1, volume 4, chapter 1, pages 1-102, Elsevier.
    6. Nicolas Frémeaux & Thomas Piketty, 2014. "France: How taxation can increase inequality," PSE-Ecole d'économie de Paris (Postprint) halshs-00951805, HAL.
    7. Richard B. Freeman, 2007. "Labor Market Institutions Around the World," NBER Working Papers 13242, National Bureau of Economic Research, Inc.
    8. Jacob Mincer, 1958. "Investment in Human Capital and Personal Income Distribution," Journal of Political Economy, University of Chicago Press, vol. 66, pages 281-281.
    9. Nicole M. Fortin & Thomas Lemieux, 1997. "Institutional Changes and Rising Wage Inequality: Is There a Linkage?," Journal of Economic Perspectives, American Economic Association, vol. 11(2), pages 75-96, Spring.
    10. Thomas Lemieux, 2008. "The changing nature of wage inequality," Journal of Population Economics, Springer;European Society for Population Economics, vol. 21(1), pages 21-48, January.
    11. Hartog, Joop, 2000. "Over-education and earnings: where are we, where should we go?," Economics of Education Review, Elsevier, vol. 19(2), pages 131-147, April.
    12. DiNardo, John & Fortin, Nicole M & Lemieux, Thomas, 1996. "Labor Market Institutions and the Distribution of Wages, 1973-1992: A Semiparametric Approach," Econometrica, Econometric Society, vol. 64(5), pages 1001-1044, September.
    13. Barsky R. & Bound J. & Charles K.K. & Lupton J.P., 2002. "Accounting for the Black-White Wealth Gap: A Nonparametric Approach," Journal of the American Statistical Association, American Statistical Association, vol. 97, pages 663-673, September.
    14. Laisney, François & Beninger, Denis, 2002. "Comparison between unitary and collective models of household labor supply with taxation," ZEW Discussion Papers 02-65, ZEW - Leibniz Centre for European Economic Research.
    15. Alexandra Spitz-Oener, 2006. "Technical Change, Job Tasks, and Rising Educational Demands: Looking outside the Wage Structure," Journal of Labor Economics, University of Chicago Press, vol. 24(2), pages 235-270, April.
    16. Koenker, Roger W & Bassett, Gilbert, Jr, 1978. "Regression Quantiles," Econometrica, Econometric Society, vol. 46(1), pages 33-50, January.
    17. David H. Autor & Lawrence F. Katz & Alan B. Krueger, 1998. "Computing Inequality: Have Computers Changed the Labor Market?," The Quarterly Journal of Economics, Oxford University Press, vol. 113(4), pages 1169-1213.
    18. Gary S. Becker, 1962. "Investment in Human Capital: A Theoretical Analysis," NBER Chapters, in: Investment in Human Beings, pages 9-49, National Bureau of Economic Research, Inc.
    19. Sicherman, Nachum, 1991. ""Overeducation" in the Labor Market," Journal of Labor Economics, University of Chicago Press, vol. 9(2), pages 101-122, April.
    20. Sergio Firpo & Nicole M. Fortin & Thomas Lemieux, 2009. "Unconditional Quantile Regressions," Econometrica, Econometric Society, vol. 77(3), pages 953-973, May.
    21. Joachim Merz & Bettina Scherg, 2014. "Polarization of Time and Income – A Multidimensional Analysis for Germany," Research on Economic Inequality, in: John A. Bishop & Juan Gabriel Rodríguez (ed.),Economic Well-Being and Inequality: Papers from the Fifth ECINEQ Meeting, volume 22, pages 273-321, Emerald Publishing Ltd.
    22. José Mata & José A. F. Machado, 2005. "Counterfactual decomposition of changes in wage distributions using quantile regression," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 20(4), pages 445-465.
    23. Parker,Simon C., 2006. "The Economics of Self-Employment and Entrepreneurship," Cambridge Books, Cambridge University Press, number 9780521030632, December.
    24. Amanda Gosling & Thomas Lemieux, 2004. "Labor Market Reforms and Changes in Wage Inequality in the United Kingdom and the United States," NBER Chapters, in: Seeking a Premier Economy: The Economic Effects of British Economic Reforms, 1980-2000, pages 275-312, National Bureau of Economic Research, Inc.
    25. Daron Acemoglu, 2002. "Technical Change, Inequality, and the Labor Market," Journal of Economic Literature, American Economic Association, vol. 40(1), pages 7-72, March.
    26. Arnaud Chevalier, 2003. "Measuring Over-education," Economica, London School of Economics and Political Science, vol. 70(279), pages 509-531, August.
    27. David H. Autor & Frank Levy & Richard J. Murnane, 2003. "The skill content of recent technological change: an empirical exploration," Proceedings, Federal Reserve Bank of San Francisco, issue Nov.
    28. Paul DE BEER, 2012. "Earnings and income inequality in the EU during the crisis," International Labour Review, International Labour Organization, vol. 151(4), pages 313-331, December.
    29. Thomas Piketty & Emmanuel Saez, 2003. "Income Inequality in the United States, 1913–1998," The Quarterly Journal of Economics, Oxford University Press, vol. 118(1), pages 1-41.
    30. Alan S. Blinder, 1973. "Wage Discrimination: Reduced Form and Structural Estimates," Journal of Human Resources, University of Wisconsin Press, vol. 8(4), pages 436-455.
    31. Stephan Dlugosz & Gesine Stephan & Ralf A. Wilke, 2014. "Fixing the Leak: Unemployment Incidence before and after a Major Reform of Unemployment Benefits in Germany," German Economic Review, Verein für Socialpolitik, vol. 15(3), pages 329-352, August.
    32. Ronald L. Oaxaca & Michael R. Ransom, 1999. "Identification in Detailed Wage Decompositions," The Review of Economics and Statistics, MIT Press, vol. 81(1), pages 154-157, February.
    33. Erik Hurst & Geng Li & Benjamin Pugsley, 2014. "Are Household Surveys Like Tax Forms? Evidence from Income Underreporting of the Self-Employed," The Review of Economics and Statistics, MIT Press, vol. 96(1), pages 19-33, March.
    34. Christian Dustmann & Johannes Ludsteck & Uta Schönberg, 2009. "Revisiting the German Wage Structure," The Quarterly Journal of Economics, Oxford University Press, vol. 124(2), pages 843-881.
    35. David H. Autor, 2003. "Outsourcing at Will: The Contribution of Unjust Dismissal Doctrine to the Growth of Employment Outsourcing," Journal of Labor Economics, University of Chicago Press, vol. 21(1), pages 1-42, January.
    36. Rosalia Castellano & Gennaro Punzo, 2013. "The Role of Family Background in the Heterogeneity of Self-Employment in Some Transition Countries," Transition Studies Review, Springer;Central Eastern European University Network (CEEUN), vol. 20(1), pages 79-88, April.
    37. Paul A. Samuelson, 1956. "Social Indifference Curves," The Quarterly Journal of Economics, Oxford University Press, vol. 70(1), pages 1-22.
    38. Oaxaca, Ronald, 1973. "Male-Female Wage Differentials in Urban Labor Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(3), pages 693-709, October.
    39. Thomas Piketty, 2003. "Income Inequality in France, 1901-1998," Journal of Political Economy, University of Chicago Press, vol. 111(5), pages 1004-1042, October.
    40. Jaison R. Abel & Richard Deitz, 2012. "Job polarization and rising inequality in the nation and the New York-northern New Jersey region," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 18(Oct).
    41. Rosalia Castellano & Gaetano Musella & Gennaro Punzo, 2017. "Structure of the labour market and wage inequality: evidence from European countries," Quality & Quantity: International Journal of Methodology, Springer, vol. 51(5), pages 2191-2218, September.
    42. Rosalia Castellano & Gennaro Punzo, 2016. "Patterns of earnings differentials across three conservative European welfare regimes with alternative education systems," Journal of Applied Statistics, Taylor & Francis Journals, vol. 43(1), pages 140-168, January.
    43. Oesch, Daniel & Rodriguez Menes, Jorge, 2010. "Upgrading or polarization? Occupational change in Britain, Germany, Spain and Switzerland, 1990-2008," MPRA Paper 21040, University Library of Munich, Germany.
    44. Juhn, Chinhui & Murphy, Kevin M & Pierce, Brooks, 1993. "Wage Inequality and the Rise in Returns to Skill," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 410-442, June.
    45. Jan Goebel & Martin Gornig & Hartmut Häußermann, 2010. "Polarisierung der Einkommen: die Mittelschicht verliert," DIW Wochenbericht, DIW Berlin, German Institute for Economic Research, vol. 77(24), pages 2-8.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Wage inequality; RIF-regression; Unconditional quantile regression; Decomposition;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:empiri:v:46:y:2019:i:2:d:10.1007_s10663-017-9397-z. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla) or (Springer Nature Abstracting and Indexing). General contact details of provider: http://www.springer.com .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.