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Skills and wage inequality in Greece: evidence from matched employer-employee data, 1995-2002

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  • Christopoulou, Rebekka
  • Kosma, Theodora

Abstract

This paper examines changes in the Greek wage distribution over 1995-2002 and the role of skill in these changes. The methodology adopted is the Machado-Mata counterfactual decomposition, which separates the part of wage changes that is due to job and workers' characteristics (composition effects) from the part due to the returns to these characteristics (price effects). We find that mean wages have not increased substantially, but wage inequality has, mostly at the upper tail of the distribution. The role of skill has been decisive. Falling tenure levels at all but the very high wage deciles, and rising education across the board, have carried much of the inequalityincreasing influence of overall composition effects. Although to a lesser extent, changes in the returns to skill have contributed to inequality by forming a U-shaped pattern along the wage distribution. This pattern is further reinforced when price-effects of skill are added together with the composition effect of tenure to produce the share of skill-effects that is responsive to market forces. Drawing on this evidence, we make a case for the routinization hypothesis.

Suggested Citation

  • Christopoulou, Rebekka & Kosma, Theodora, 2009. "Skills and wage inequality in Greece: evidence from matched employer-employee data, 1995-2002," LSE Research Online Documents on Economics 24198, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:24198
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    Cited by:

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    2. Yiannos Katsourides, 2013. "Political Parties and Trade Unions in Cyprus," GreeSE – Hellenic Observatory Papers on Greece and Southeast Europe 74, Hellenic Observatory, LSE.
    3. Apergis, Nicholas, 2011. "Characteristics of inflation in Greece: mean spillover effects among CPI components," LSE Research Online Documents on Economics 32597, London School of Economics and Political Science, LSE Library.
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    5. Theodore Pelagidis, 2010. "The Greek Paradox of Falling Competitiveness and Weak Institutions in a High GDP Growth Rate Context (1995-2008)," GreeSE – Hellenic Observatory Papers on Greece and Southeast Europe 38, Hellenic Observatory, LSE.
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    9. Christos Lyrintzis, 2011. "Greek Politics in the Era of Economic Crisis: Reassessing Causes and Effects," GreeSE – Hellenic Observatory Papers on Greece and Southeast Europe 45, Hellenic Observatory, LSE.
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    12. Christos Dimas, 2010. "Privatization in the Name of ‘Europe’: analyzing the telecoms privatization in Greece from a ‘discursive institutionalist’ perspective," GreeSE – Hellenic Observatory Papers on Greece and Southeast Europe 41, Hellenic Observatory, LSE.
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    14. George Pagoulatos & Nikolaos Zahariadis, 2011. "Politics, Labor, Regulation, and Performance: lessons from the privatization of OTE," GreeSE – Hellenic Observatory Papers on Greece and Southeast Europe 46, Hellenic Observatory, LSE.
    15. Stelios Karagiannis & Yannis Panagopoulos & Prodromos Vlamis, 2010. "Symmetric or Asymmetric Interest Rate Adjustments? Evidence from Greece, Bulgaria and Slovenia," GreeSE – Hellenic Observatory Papers on Greece and Southeast Europe 39, Hellenic Observatory, LSE.
    16. Voskeritsian, Horen & Kornelakis, Andreas, 2011. "Institutional change in Greek industrial relations in an era of fiscal crisis," LSE Research Online Documents on Economics 41758, London School of Economics and Political Science, LSE Library.
    17. George Kazamias, 2010. "From Pragmatism to Idealism to Failure: Britain in the Cyprus crisis of 1974," GreeSE – Hellenic Observatory Papers on Greece and Southeast Europe 42, Hellenic Observatory, LSE.
    18. Lyrintzis, Christos, 2011. "Greek politics in the era of economic crisis: reassessing causes and effects," LSE Research Online Documents on Economics 33826, London School of Economics and Political Science, LSE Library.

    More about this item

    Keywords

    Returns to skill; Wage inequality; Quantile regression;

    JEL classification:

    • N0 - Economic History - - General
    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General

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