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Wage Dispersion Between and Within Plants: Sweden 1985-2000

In: The Structure of Wages: An International Comparison

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  • Oskar Nordström Skans
  • Per-Anders Edin
  • Bertil Holmlund

Abstract

The paper describes the Swedish wage distribution and how it correlates with worker mobility and plant-specific factors. It is well known that wage inequality has increased in Sweden since the mid-1980s. However, little evidence has so far been available as to whether this development reflects increased dispersion between plants, between individuals in the same plant, or both. We use a new linked employer-employee data set and discover that a trend rise in between-plant wage inequality account for the entire increase in wage dispersion. This pattern, which remains when we control for observable individual human capital characteristics, may reflect increased sorting of workers by skill levels and/or increased scope for rent sharing in local wage negotiations. Our discussion suggests that both factors may have become more important.
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Suggested Citation

  • Oskar Nordström Skans & Per-Anders Edin & Bertil Holmlund, 2009. "Wage Dispersion Between and Within Plants: Sweden 1985-2000," NBER Chapters,in: The Structure of Wages: An International Comparison, pages 217-260 National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberch:2372
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    References listed on IDEAS

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    1. Kremer, M & Maskin, E, 1996. "Wage Inequality and Segregation by Skill," Working papers 96-23, Massachusetts Institute of Technology (MIT), Department of Economics.
    2. Bertil Holmlund & Donald Storrie, 2002. "Temporary Work In Turbulent Times: The Swedish Experience," Economic Journal, Royal Economic Society, vol. 112(480), pages 245-269, June.
    3. Bertil Holmlund, 2003. "The Rise and Fall of Swedish Unemployment," CESifo Working Paper Series 918, CESifo Group Munich.
    4. Per-Anders Edin & Bertil Holmlund, 1995. "The Swedish Wage Structure: The Rise and Fall of Solidarity Wage Policy?," NBER Chapters,in: Differences and Changes in Wage Structures, pages 307-344 National Bureau of Economic Research, Inc.
    5. Forslund, Anders, 1994. "Wage Setting at the Firm Level--Insider versus Outsider Forces," Oxford Economic Papers, Oxford University Press, vol. 46(2), pages 245-261, April.
    6. Michael Kremer & Eric Maskin, 1996. "Wage Inequality and Segregation," Harvard Institute of Economic Research Working Papers 1777, Harvard - Institute of Economic Research.
    7. Timothy Dunne & Lucia Foster & John Haltiwanger & Kenneth R. Troske, 2004. "Wage and Productivity Dispersion in United States Manufacturing: The Role of Computer Investment," Journal of Labor Economics, University of Chicago Press, vol. 22(2), pages 397-430, April.
    8. Edin, P.-A. & Fredriksson, P., 2000. "LINDA - Longitudinal INdividual DAta for Sweden," Papers 2000:19, Uppsala - Working Paper Series.
    9. Richard B. Freeman & Lawrence F. Katz, 1995. "Differences and Changes in Wage Structures," NBER Books, National Bureau of Economic Research, Inc, number free95-1, December.
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    Citations

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    Cited by:

    1. Mikael Carlsson & Oskar Nordstrom Skans, 2012. "Evaluating Microfoundations for Aggregate Price Rigidities: Evidence from Matched Firm-Level Data on Product Prices and Unit Labor Cost," American Economic Review, American Economic Association, vol. 102(4), pages 1571-1595, June.
    2. Mikael Carlsson & Julián Messina & Oskar Nordström Skans, 2016. "Wage Adjustment and Productivity Shocks," Economic Journal, Royal Economic Society, vol. 126(595), pages 1739-1773, September.
    3. Åslund, Olof & Böhlmark, Anders & Nordström Skans, Oskar, 2009. "Age at migration and social integration," Working Paper Series 2009:21, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    4. Nabavi, Pardis, 2015. "Increasing Wage Gap, Spatial Structure and Market Access: Evidence from Swedish Micro Data," Working Paper Series in Economics and Institutions of Innovation 409, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
    5. Adermon, Adrian & Gustavsson, Magnus, 2011. "Job Polarization and Task-Biased Technological Change: Sweden, 1975–2005," Working Paper Series, Center for Labor Studies 2011:11, Uppsala University, Department of Economics.
    6. Eliasson, Tove, 2013. "Decomposing immigrant wage assimilation - the role of workplaces and occupations," Working Paper Series, Center for Labor Studies 2013:6, Uppsala University, Department of Economics.
    7. Dan‐Olof Rooth & Anders Stenberg, 2012. "The Shape of the Income Distribution and Economic Growth – Evidence from Swedish Labor Market Regions," Scottish Journal of Political Economy, Scottish Economic Society, vol. 59(2), pages 196-223, May.
    8. Mak, Eric & Siow, Aloysius, 2017. "Occupational Choice and Matching in the Labor Market," IZA Discussion Papers 10584, Institute for the Study of Labor (IZA).
    9. Card, David & Cardoso, Ana Rute & Kline, Patrick, 2013. "Bargaining and the Gender Wage Gap: A Direct Assessment," IZA Discussion Papers 7592, Institute for the Study of Labor (IZA).
    10. David Domeij & Martin Floden, 2010. "Inequality Trends in Sweden 1978-2004," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 13(1), pages 179-208, January.
    11. Daniel Schaefer & Carl Singleton, 2017. "Recent Changes in British Wage Inequality: Evidence from Firms and Occupations," 2017 Meeting Papers 459, Society for Economic Dynamics.
    12. Valeria Cirillo & Matteo Sostero & Federico Tamagni, 2017. "Innovation and within-firm wage inequalities: empirical evidence from major European countries," Industry and Innovation, Taylor & Francis Journals, vol. 24(5), pages 468-491, July.
    13. Olof Åslund & Lena Hensvik & Oskar Nordström Skans, 2014. "Seeking Similarity: How Immigrants and Natives Manage in the Labor Market," Journal of Labor Economics, University of Chicago Press, vol. 32(3), pages 405-441.
    14. David Card & Jörg Heining & Patrick Kline, 2013. "Workplace Heterogeneity and the Rise of West German Wage Inequality," The Quarterly Journal of Economics, Oxford University Press, vol. 128(3), pages 967-1015.
    15. Åslund, Olof & Böhlmark, Anders & Skans, Oskar Nordström, 2015. "Childhood and family experiences and the social integration of young migrants," Labour Economics, Elsevier, vol. 35(C), pages 135-144.
    16. Paul Oyer, 2009. "Wage Structure and Labor Mobility in Sweden, 1970-90," NBER Chapters,in: The Structure of Wages: An International Comparison, pages 419-447 National Bureau of Economic Research, Inc.
    17. Håkanson, Christina & Lindqvist, Erik & Vlachos, Jonas, 2015. "Firms and Skills: The Evolution of Worker Sorting," Working Paper Series 1072, Research Institute of Industrial Economics.
    18. Bertil Holmlund & Qian Liu & Oskar Nordström Skans, 2008. "Mind the gap? Estimating the effects of postponing higher education," Oxford Economic Papers, Oxford University Press, vol. 60(4), pages 683-710, October.
    19. Dumont, Michel & Rayp, Glenn & Willemé, Peter, 2012. "The bargaining position of low-skilled and high-skilled workers in a globalising world," Labour Economics, Elsevier, vol. 19(3), pages 312-319.
    20. Hensvik, Lena, 2011. "Manager impartiality? Worker-firm matching and the gender wage gap," Working Paper Series 2011:22, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    21. M. Dumont & G. Rayp & P. Willemé, 2010. ""Ménage à trois" in a globalizing world: bargaining between firms, low-skilled and high-skilled workers," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 10/687, Ghent University, Faculty of Economics and Business Administration.
    22. SAITO Yukiko & KOUNO Toshiaki, 2012. "Rising Wage Inequality Within Firms: Evidence from Japanese health insurance society data," Discussion papers 12039, Research Institute of Economy, Trade and Industry (RIETI).
    23. Eliasson, Tove, 2013. "Decomposing immigrant wage assimilation - the role of workplaces and occupations," Working Paper Series 2013:7, IFAU - Institute for Evaluation of Labour Market and Education Policy.

    More about this item

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs

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