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Inter-Country Wage Differences in the European Union

Author

Listed:
  • João Pereira

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

  • Maria Aurora Galego

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

Abstract

In this paper we investigate the determinants of wage gaps between European countries using data from the EU-SILC data base. Unlike previous studies, we decompose these gaps across the wage distribution by employing a recent methodology proposed by Firpo et al (2009) and Fortin et al. (2011). This approach allows analysing the contribution of each covariate to the wage decomposition components (wage structure and wage composition). We conclude that both wage structure and wage composition effects contribute to explaining wage differentials, but that the wage structure effect is more important. This effect seems to be mainly explained by differences in unknown factors. The composition effect, in turn, is explained by differences in education, in the occupational structure, in the percentage of workers with supervisory responsibilities and to a lesser extent by differences in the industrial structure and in the workers’ level of experience.

Suggested Citation

  • João Pereira & Maria Aurora Galego, 2015. "Inter-Country Wage Differences in the European Union," CEFAGE-UE Working Papers 2015_15, University of Evora, CEFAGE-UE (Portugal).
    • Handle: RePEc:cfe:wpcefa:2015_15
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    References listed on IDEAS

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    6. Olivier Bargain & Sumon Kumar Bhaumik & Manisha Chakrabarty & Zhong Zhao, 2009. "Earnings Differences Between Chinese And Indian Wage Earners, 1987–2004," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 55(s1), pages 562-587, July.
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    Cited by:

    1. Jan Drahokoupil & Agnieszka Piasna, 2018. "What is behind low wages in central and eastern Europe?," Post-Communist Economies, Taylor & Francis Journals, vol. 30(4), pages 421-439, July.

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    More about this item

    Keywords

    Wage differences; Unconditional quantile regression; Wage decompositions.;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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