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Capitalist economies and wage inequality

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  • Wiemer Salverda
  • Ken Mayhew

Abstract

This article presents new stylized facts on the incidence of low pay and mobility out of low pay for 13 European countries and the USA. Women, the young, the less skilled, and part-timers are generally most at risk, as are those who work in retail, hotels, catering, and personal services. However, the relative importance of these characteristics can vary from country to country. The incidence of low pay varies considerably across countries, as does its trend. No direct link is found to aggregate employment or to the employment rate of the less skilled. Nor does the industrial structure of employment have much effect. However, differences between the low-wage production of goods and of services are important. 'Inclusive' labour relations are central in containing the incidence of low-pay. By inclusiveness is meant the existence of mechanisms, formal or informal, to extend terms and conditions negotiated by workers with strong bargaining power to workers with less bargaining power. In some countries a national minimum wage is an essential accompaniment. The article considers the extent to which countries can maintain the more benign institutions that limit low pay. Copyright 2009, Oxford University Press.

Suggested Citation

  • Wiemer Salverda & Ken Mayhew, 2009. "Capitalist economies and wage inequality," Oxford Review of Economic Policy, Oxford University Press, vol. 25(1), pages 126-154, Spring.
  • Handle: RePEc:oup:oxford:v:25:y:2009:i:1:p:126-154
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    File URL: http://hdl.handle.net/10.1093/oxrep/grp008
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    Cited by:

    1. Marsden, David, 2010. "The growth of extended 'entry tournaments' and the decline of institutionalised occupational labour markets in Britain," LSE Research Online Documents on Economics 28740, London School of Economics and Political Science, LSE Library.
    2. Bea Cantillon & Sarah Marchal & Chris Luigjes, 2015. "Decent incomes for the poor: which role for Europe?," ImPRovE Working Papers 15/20, Herman Deleeck Centre for Social Policy, University of Antwerp.
    3. Aldo Barba & Massimo Pivetti, 2012. "Distribution and accumulation in post-1980 advanced capitalism," Review of Keynesian Economics, Edward Elgar Publishing, vol. 1(0), pages 126-142.
    4. Jeroen Horemans, 2016. "Polarisation of Non-standard Employment in Europe: Exploring a Missing Piece of the Inequality Puzzle," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 125(1), pages 171-189, January.
    5. Jens Holscher & Cristiano Perugini & Fabrizio Pompei, 2011. "Wage inequality, labour market flexibility and duality in Eastern and Western Europe," Post-Communist Economies, Taylor & Francis Journals, vol. 23(3), pages 271-310.
    6. Olivier Pintelon & Bea Cantillon & Karel Van den Bosch & Christopher T. Whelan, 2011. "The Social Stratification of Social Risks: Class and Responsibility in the 'New' Welfare State," Working Papers 201123, Geary Institute, University College Dublin.
    7. Eichhorst, Werner & Marx, Paul, 2010. "Whatever Works: Dualisation and the Service Economy in Bismarckian Welfare States," IZA Discussion Papers 5035, Institute for the Study of Labor (IZA).
    8. Jeroen Horemans, 2016. "Polarisation of Non-standard Employment in Europe: Exploring a Missing Piece of the Inequality Puzzle," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 125(1), pages 171-189, January.
    9. Olivier Pintelon & Bea Cantillon & Karel Van den Bosch & Christopher T. Whelan, 2011. "The Social Stratification of Social Risks," Working Papers 1104, Herman Deleeck Centre for Social Policy, University of Antwerp.

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