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International Differences in Male Wage Inequality: Institutions versus Market Forces

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  • Blau, Francine D
  • Kahn, Lawrence M

Abstract

This paper studies the considerably higher level of wage inequality in the United States than in nine other OECD countries. The authors find that the greater overall U.S. wage dispersion primarily reflects substantially more compression at the bottom of the wage distribution in the other countries. While differences in the distribution of measured characteristics help to explain some aspects of the international differences, higher U.S. prices (i.e., rewards to skills and rents) are an important factor. Labor market institutions, chiefly the relatively decentralized wage-setting mechanisms in the United States, provide the most persuasive explanation for these patterns. Copyright 1996 by University of Chicago Press.

Suggested Citation

  • Blau, Francine D & Kahn, Lawrence M, 1996. "International Differences in Male Wage Inequality: Institutions versus Market Forces," Journal of Political Economy, University of Chicago Press, vol. 104(4), pages 791-836, August.
  • Handle: RePEc:ucp:jpolec:v:104:y:1996:i:4:p:791-836
    DOI: 10.1086/262043
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    JEL classification:

    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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