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Accounting for changes in the Spanish wage distribution: the role of employment Composition effects

Author

Listed:
  • Raquel Carrasco

    (Universidad Carlos III)

  • Juan F. Jimeno

    () (Banco de España)

  • A. Carolina Ortega

    (Universidad Nacional de Tucumán)

Abstract

Despite a rapid decrease in unemployment and strong GDP and employment growth, real wages barely increased in Spain over the period 1995-2006. An explanation of this lack of growth may rely on employment composition effects derived from structural changes, such as the rise in the weights of employment in the construction and services sectors, the increase in female employment participation, and the arrival of large immigration inflows. Using data from three waves of the Structure of Earnings Survey, we break down observed wage changes into those due to varying worker and job characteristics and variations of the returns to those characteristics. Quantile regressions are used to estimate wage equations at different percentiles and to construct the counterfactual wage distributions that would have been observed had individual and job characteristics remain constant over time. Our main finding is that the lack of growth of Spanish real wages over the period 1995-2006 is mainly due to the decrease of returns to characteristics, specially education and labour market experience, which is more noticeable at the upper deciles of the wage distribution, and not to changes in employment composition, which when taken over a wide set of worker and job characteristics, had positive effects on wages.

Suggested Citation

  • Raquel Carrasco & Juan F. Jimeno & A. Carolina Ortega, 2011. "Accounting for changes in the Spanish wage distribution: the role of employment Composition effects," Working Papers 1120, Banco de España;Working Papers Homepage.
  • Handle: RePEc:bde:wpaper:1120
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    File Function: First version, September 2011
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Stéphane Bonhomme & Laura Hospido, 2012. "The cycle of earnings inequality: evidence from Spanish social security data," Working Papers 1225, Banco de España;Working Papers Homepage.
    2. Dueñas, Diego & Iglesias, Carlos & Llorente, Raquel, 2016. "¿Por qué las mujeres no se distribuyen de forma homogénea en el mercado de trabajo español? El “efecto rechazo” y el “efecto atracción”," El Trimestre Económico, Fondo de Cultura Económica, vol. 0(330), pages .339-369, abril-jun.
    3. Brindusa Anghel & Sara Rica & Aitor Lacuesta, 2014. "The impact of the great recession on employment polarization in Spain," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 5(2), pages 143-171, August.
    4. Maritza López-Novella, 2014. "Working Paper 11-14 - Évolution salariale en Belgique entre 2000 et 2010 : importance des effets de composition de la main-d’oeuvre," Working Papers 1411, Federal Planning Bureau, Belgium.
    5. Dueñas, Diego & Iglesias, Carlos & Llorente, Raquel, 2014. "Do services reduce gender inequality in labor markets? The service sector, knnowledge-intensive services and the gender pay gap," MPRA Paper 61628, University Library of Munich, Germany.
    6. Brindusa Anghel & Sara de la Rica & Aitor Lacuesta, 2013. "Employment polarisation in Spain over the course of the 1997-2012 cycle," Working Papers 1321, Banco de España;Working Papers Homepage.
    7. Max Coveney & Pilar Garcia Gomez & Eddy Van Doorslaer & Tom Van Ourti, 2015. "Health Disparities by Income in Spain before and after the Economic Crisis," Tinbergen Institute Discussion Papers 15-130/V, Tinbergen Institute.
    8. Ada Ferrer-i-carbonell & X. Ramos & M. Oviedo, 2013. "GINI Country Report: Growing Inequalities and their Impacts in Spain," GINI Country Reports spain, AIAS, Amsterdam Institute for Advanced Labour Studies.
    9. Anghel, Brindusa & de la Rica, Sara & Lacuesta, Aitor, 2013. "Employment Polarization in Spain along the Cycle 1997-2012," IZA Discussion Papers 7816, Institute for the Study of Labor (IZA).

    More about this item

    Keywords

    keyword; Wage structure; quantile regressions; composition effects;

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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