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Wage inequality and structural change

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  • Joanna Tyrowicz

    (Group for Research in Applied Economics (GRAPE)
    University of Warsaw
    Institut für Arbeitsrecht und Arbeitsbeziehungen in der Europäischen Union (IAAEU)
    Institute of Labor Economics (IZA))

  • Magdalena Smyk

    (Group for Research in Applied Economics (GRAPE))

Abstract

Income inequality in the context of large structural change has received a lot of attention in the literature, but most studies relied on household post-transfer inequality measures. This study utilizes a novel and fairly comprehensive collection of micro datasets between 1980s and 2010 for both advanced market economies and economies undergoing transition from central planning to market based system. We show that earned income inequality was initially lower in transition economies and immediately upon the change of the economic system surpassed the levels observed in advanced economies. We decompose changes in wage inequality into parts that can be attributed to changes in characteristics (mainly education) and changes in rewards, but did not find any leading factor. Finally, in the context of skill-biased technological change literature we find a very weak link between structural changes and wages in both advanced and post-transition economies. %This holds regardless of whether an economy has underwent a large structural shock or not.

Suggested Citation

  • Joanna Tyrowicz & Magdalena Smyk, 2017. "Wage inequality and structural change," GRAPE Working Papers 8, GRAPE Group for Research in Applied Economics.
  • Handle: RePEc:fme:wpaper:8
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    4. Laporšek, Suzana & Orazem, Peter F. & Vodopivec, Milan & Vodopivec, Matija, 2021. "Winners and losers after 25 years of transition: Decreasing wage inequality in Slovenia," Economic Systems, Elsevier, vol. 45(2).
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    6. de Pinto Marco & Goerke Laszlo, 2019. "Efficiency Wages in Cournot-Oligopoly," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 19(4), pages 1-13, October.
    7. Doan, Tinh & Ha, Van & Tran, Tuyen & Yang, Judy, 2023. "Dynamics of wage inequality over the prolonged economic transformation: The case of Vietnam," Economic Analysis and Policy, Elsevier, vol. 78(C), pages 816-834.
    8. Monika Martišková & Marta Kahancová & Jakub Kostolný, 2021. "Negotiating wage (in)equality: changing union strategies in high-wage and low-wage sectors in Czechia and Slovakia," Transfer: European Review of Labour and Research, , vol. 27(1), pages 75-96, February.
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    10. Jan Pintera, 2022. "Skill-bias and Wage Inequality in the EU New Member States: Empirical Investigation," Working Papers IES 2022/26, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Oct 2022.
    11. Clemens Buchen & Sven A. Hartmann & Alberto Palermo, 2021. "Our product is unique: A note on a delegation game with differentiated products," IAAEU Discussion Papers 202102, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
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    More about this item

    Keywords

    wage inequality; structural change; transition; skill biased technological change;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • N34 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - Europe: 1913-
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
    • P36 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Consumer Economics; Health; Education and Training; Welfare, Income, Wealth, and Poverty
    • P51 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems

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