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When Supply Meets Demand: Wage Inequality in Portugal

Author

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  • Centeno, Mario

    (Banco de Portugal)

  • Novo, Alvaro A.

    (Banco de Portugal)

Abstract

Wage inequality in Portugal increased over the last quarter of century. The period from 1982 to 1995 witnessed strong increases in both upper- and lower-tail inequality. A shortage of skills combined with skill-biased technological changes are at the core of this evolution. Since 1995, lower-tail inequality decreased, while upper-tail inequality increased at a slower rate. The supply of high-skilled workers more than doubled during this period, contributing significantly to the slowdown. Polarization of employment demand is the more credible explanation for the more recent evolution. As in other developed economies, for instance Germany and the United States, we show that institutions played a minor role in shaping changes in inequality.

Suggested Citation

  • Centeno, Mario & Novo, Alvaro A., 2009. "When Supply Meets Demand: Wage Inequality in Portugal," IZA Discussion Papers 4592, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp4592
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    References listed on IDEAS

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    Cited by:

    1. Joao Pereira & Aurora Galego, 2013. "Intra-Regional Regional Wage Inequality In Portugal: A Quantile Based Decomposition Analisys," ERSA conference papers ersa13p158, European Regional Science Association.
    2. Anabela Carneiro & José Varejão, 2012. "Establishment Turnover and the Evolution of Wage Inequality," CEF.UP Working Papers 1202, Universidade do Porto, Faculdade de Economia do Porto.
    3. David Card & Ana Rute Cardoso, 2012. "Can Compulsory Military Service Raise Civilian Wages? Evidence from the Peacetime Draft in Portugal," American Economic Journal: Applied Economics, American Economic Association, vol. 4(4), pages 57-93, October.
    4. Luca David Opromolla, 2013. "Trade and wage inequality," Economic Bulletin and Financial Stability Report Articles and Banco de Portugal Economic Studies, Banco de Portugal, Economics and Research Department.
    5. Álvaro A. Novo & Cláudia Duarte & Mário Centeno, 2011. "The impact of the minimum wage on low-wage earners," Economic Bulletin and Financial Stability Report Articles and Banco de Portugal Economic Studies, Banco de Portugal, Economics and Research Department.
    6. João Pereira & Aurora Galego, 2015. "Intra-regional Wage Inequality in Portugal," Spatial Economic Analysis, Taylor & Francis Journals, vol. 10(1), pages 79-101, March.
    7. Naticchioni, Paolo & Ragusa, Giuseppe & Massari, Riccardo, 2014. "Unconditional and Conditional Wage Polarization in Europe," IZA Discussion Papers 8465, Institute of Labor Economics (IZA).
    8. David Card & Ana Rute Cardoso, 2011. "Can Compulsory Military Service Increase Civilian Wages? Evidence from the Peacetime Draft in Portugal," NBER Working Papers 17694, National Bureau of Economic Research, Inc.
    9. Valeria Cirillo & Mario Pianta & Leopoldo Nascia, 2018. "Technology and Occupations in Business Cycles," Sustainability, MDPI, vol. 10(2), pages 1-25, February.

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    More about this item

    Keywords

    institutions; inequality; polarization; supply; demand;
    All these keywords.

    JEL classification:

    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • D3 - Microeconomics - - Distribution
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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