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Decomposition of Regional Wage Differences Along the Wage Distribution in Portugal: the Importance of Covariates

  • Aurora Galego


    (University of Évora, Department of Economics and CEFAGE-UE)

  • João Pereira


    (University of Évora, Department of Economics and CEFAGE-UE)

Unlike previous studies, in this paper we estimate the contribution of covariates for the regional wage decomposition components along the wage distribution employing Firpo et al. (2009) method. We consider the case of Portugal, a country with persistent and large regional wage gaps. We find that education, occupation and firm size are the most important factors to explain the growing importance of the composition effect. The wage structure effect, in turn, is mainly determined by differences in rewards to experience and tenure. Moreover, we conclude that the importance of these covariates for both effects is not equal along the wage distribution.

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Paper provided by University of Evora, CEFAGE-UE (Portugal) in its series CEFAGE-UE Working Papers with number 2013_16.

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Length: 36 pages
Date of creation: 2013
Date of revision:
Handle: RePEc:cfe:wpcefa:2013_16
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