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Sources of wage inequality

Author

Listed:
  • Akerman, Anders
  • Helpman, Elhanan
  • Itskhoki, Oleg
  • Muendler, Marc-Andreas
  • Redding, Stephen

Abstract

Recent theories of firm heterogeneity emphasize between-firm wage differences as a new mechanism through which trade can affect wage inequality. Using linked employer-employee data for Sweden, we show that many of the stylized facts about wage inequality found in Helpman et al. (2012) for Brazil also hold for Sweden. Much of overall wage inequality arises within sector-occupations and for workers with similar observable characteristics. One notable difference is a smaller contribution from between-firm differences in wages in Sweden, which could reflect the influence of Swedish labor market institutions in dampening the scope for variation in wages between firms through collective wage agreements.

Suggested Citation

  • Akerman, Anders & Helpman, Elhanan & Itskhoki, Oleg & Muendler, Marc-Andreas & Redding, Stephen, 2013. "Sources of wage inequality," LSE Research Online Documents on Economics 59338, London School of Economics and Political Science, LSE Library.
  • Handle: RePEc:ehl:lserod:59338
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    File URL: http://eprints.lse.ac.uk/59338/
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    References listed on IDEAS

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    1. Elhanan Helpman & Oleg Itskhoki & Marc-Andreas Muendler & Stephen J. Redding, 2017. "Trade and Inequality: From Theory to Estimation," Review of Economic Studies, Oxford University Press, vol. 84(1), pages 357-405.
    2. Hartmut Egger & Udo Kreickemeier, 2017. "Firm Heterogeneity and the Labor Market Effects of Trade Liberalization," World Scientific Book Chapters,in: International Trade and Labor Markets Welfare, Inequality and Unemployment, chapter 10, pages 265-306 World Scientific Publishing Co. Pte. Ltd..
    3. Carl Davidson & Steven J. Matusz, 2010. "International Trade with Equilibrium Unemployment," Economics Books, Princeton University Press, edition 1, number 9075, June.
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    Citations

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    Cited by:

    1. Elhanan Helpman, 2014. "Foreign Trade and Investment: Firm-level Perspectives," Economica, London School of Economics and Political Science, vol. 81(321), pages 1-14, January.
    2. Antoni, Manfred & Janser, Markus & Lehmer, Florian, 2015. "The hidden winners of renewable energy promotion: Insights into sector-specific wage differentials," Energy Policy, Elsevier, vol. 86(C), pages 595-613.
    3. Araújo, Bruno César & Paz, Lourenço S., 2014. "The effects of exporting on wages: An evaluation using the 1999 Brazilian exchange rate devaluation," Journal of Development Economics, Elsevier, vol. 111(C), pages 1-16.
    4. Gabriel Felbermayr & Giammario Impullitti & Julien Prat, 2014. "Firm Dynamics and Residual Inequality in Open Economies," CESifo Working Paper Series 4666, CESifo Group Munich.
    5. repec:eee:jetheo:v:172:y:2017:i:c:p:478-504 is not listed on IDEAS
    6. repec:eee:inecon:v:109:y:2017:i:c:p:31-42 is not listed on IDEAS
    7. Becker, Dennis, 2014. "Heterogeneous Firms and Informality: The Effects of Trade Liberalization on Labor Markets," Working Papers 180124, Cornell University, Department of Applied Economics and Management.
    8. Karacaovali, Baybars & Tabakis, Chrysostomos, 2017. "Wage inequality dynamics and trade exposure in South Korea," Journal of Asian Economics, Elsevier, vol. 48(C), pages 48-65.
    9. L. Alan Winters & Antonio Martuscelli, 2014. "Trade Liberalization and Poverty: What Have We Learned in a Decade?," Annual Review of Resource Economics, Annual Reviews, vol. 6(1), pages 493-512, October.
    10. Sun, Sizhong & Anwar, Sajid, 2015. "Taxation of labour, product varieties and skilled–unskilled wage inequality: Short run versus long run," International Review of Economics & Finance, Elsevier, vol. 38(C), pages 250-257.
    11. Anwar, Sajid & Sun, Sizhong, 2015. "Taxation of labour income and the skilled–unskilled wage inequality," Economic Modelling, Elsevier, vol. 47(C), pages 18-22.
    12. Lucas van der Velde, 2017. "Within occupation wage dispersion and the task content of jobs," GRAPE Working Papers 22, GRAPE Group for Research in Applied Economics.

    More about this item

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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