Technological choices under institutional constraints: measuring the impact on earnings dispersion
Also due to the competitive pressure of imports from the developing countries, a switch to labour-saving techniques has happened in most sectors of OECD countries in the last decades. The distribution of earnings levels has been significantly affected. Wage dispersion is strictly interwoven with employment rates across skill levels, as they are jointly determined by the trajectories followed by firms in choosing their productive techniques, as well as by labour market institutions providing insurance to risk averse workers against unemployment and low wages. We conduct empirical estimates on the technological patterns determined by restrictions placed by labour market regulation on the employers’ production decisions, which narrow the capacity of the firm to decide on the employment level and on the productive techniques combining high-skill and low-skill workers. Our investigation relies on: (i) an index of earning dispersion (for each country under scrutiny and for each sector the skill premium and the high-skill ratio), to disentangle the combined effect of earnings and employment percentages of high, intermediate, and low skill workers; (ii) a Theil decomposition, to analyse the trends in earnings and wage dispersion between-sectors and within-sectors and account for the evolution of wages and employment at the sectoral level. We show that European firms, differently from the hypothesis put forward by Krugman (1994), do not stay passive in front of institutional constraints, but their technological choices are meant to combine productive strategies with labour market conditions.
|Date of creation:||Sep 2007|
|Contact details of provider:|| Postal: Piazza San Francesco 7, 53100 Siena|
Web page: http://www.depfid.unisi.it/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Howitt, Peter & Griffith, Rachel & Aghion, Philippe & Blundell, Richard & Bloom, Nick, 2005.
"Competition and Innovation: An Inverted-U Relationship,"
4481507, Harvard University Department of Economics.
- Philippe Aghion & Nick Bloom & Richard Blundell & Rachel Griffith & Peter Howitt, 2005. "Competition and Innovation: an Inverted-U Relationship," The Quarterly Journal of Economics, Oxford University Press, vol. 120(2), pages 701-728.
- Philippe Aghion & Nicholas Bloom & Richard Blundell & Rachel Griffith & Peter Howitt, 2002. "Competition and innovation: an inverted U relationship," IFS Working Papers W02/04, Institute for Fiscal Studies.
- Philippe Aghion & Nicholas Bloom & Richard Blundell & Rachel Griffith & Peter Howitt, 2002. "Competition and Innovation: An Inverted U Relationship," NBER Working Papers 9269, National Bureau of Economic Research, Inc.
- Daron Acemoglu, 2002.
"Cross-Country Inequality Trends,"
LIS Working papers
296, LIS Cross-National Data Center in Luxembourg.
- Andrea Bassanini & Stefano Scarpetta & Philip Hemmings, 2001. "Economic Growth: The Role of Policies and Institutions: Panel Data. Evidence from OECD Countries," OECD Economics Department Working Papers 283, OECD Publishing.
- Acemoglu, D., 1996.
"Changes in Unemployment and Wage Inequality: An Alternative Theory and Some Evidence,"
96-15, Massachusetts Institute of Technology (MIT), Department of Economics.
- Daron Acemoglu, 1999. "Changes in Unemployment and Wage Inequality: An Alternative Theory and Some Evidence," American Economic Review, American Economic Association, vol. 89(5), pages 1259-1278, December.
- Daron Acemoglu, 1998. "Changes in Unemployment and Wage Inequality: An Alternative Theory and Some Evidence," NBER Working Papers 6658, National Bureau of Economic Research, Inc.
- Acemoglu, Daron, 1996. "Changes in Unemployment and Wage Inequality: An Alternative Theory and Some Evidence," CEPR Discussion Papers 1459, C.E.P.R. Discussion Papers.
- Robert C. Feenstra, 2007. "Globalization and Its Impact on Labour," wiiw Working Papers 44, The Vienna Institute for International Economic Studies, wiiw.
- Alfonso Arpaia & Gilles Mourre, 2005.
"Labour Market Institutions and Labour Market Performance: A Survey of the Literature,"
Labor and Demography
- Alfonso Arpaia & Gilles Mourre, 2005. "Labour market institutions and labour market performance: A survey of the literature," European Economy - Economic Papers 2008 - 2015 238, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
- Giulio Piccirilli & Nicola ACOCELLA & Riccardo LEONI, 2008. "Social Pacts, Employment and Growth. A reappraisal of Ezio Tarantelli’s thought," Rivista Internazionale di Scienze Sociali, Vita e Pensiero, Pubblicazioni dell'Universita' Cattolica del Sacro Cuore, vol. 116(3), pages 365-372.
- Jorn-Steffen Pischke, 2004.
"Labor Market Institutions, Wages, and Investment,"
NBER Working Papers
10735, National Bureau of Economic Research, Inc.
- Pischke, Jörn-Steffen, 2004. "Labor Market Institutions, Wages, and Investment," IZA Discussion Papers 1268, Institute for the Study of Labor (IZA).
- Jorn-Steffen Pischke, 2004. "Labor market institutions, wages and investment," LSE Research Online Documents on Economics 19938, London School of Economics and Political Science, LSE Library.
- Jörn-Steffen Pischke, 2004. "Labor Market Institutions, Wages and Investment," CEP Discussion Papers dp0652, Centre for Economic Performance, LSE.
- Joern-Steffen Pischke, 2004. "Labor Market Institutions, Wages and Investment," CESifo Working Paper Series 1278, CESifo Group Munich.
- Francine D. Blau & Lawrence M. Kahn, 2000.
"Gender Differences in Pay,"
NBER Working Papers
7732, National Bureau of Economic Research, Inc.
- C. Denis & K. Mc Morrow & W. Röger & R. Veugelers, 2005. "The Lisbon Strategy and the EU's structural productivity problem," European Economy - Economic Papers 2008 - 2015 221, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
- Elisabetta Croci Angelini & Francesco Farina, 2007.
"Wage Inequality in Europe: the Role of Labour Market and Redistributive Institutions,"
AIEL Series in Labour Economics,
in: Nicola Acocella & Riccardo Leoni (ed.), Social Pacts, Employment and Growth. A Reappraisal of Ezio Tarantelli’s Thought, edition 1, chapter 10, pages 195-217
AIEL - Associazione Italiana Economisti del Lavoro.
- Elisabetta Croci Angelini & Francesco Farina, "undated". "Wage Inequality in Europe: the Role of Labour Market and Redistributive Institutions," Department of Economics University of Siena 463, Department of Economics, University of Siena.
- Timothy Dunne & Lucia Foster & John Haltiwanger & Kenneth R. Troske, 2004. "Wage and Productivity Dispersion in United States Manufacturing: The Role of Computer Investment," Journal of Labor Economics, University of Chicago Press, vol. 22(2), pages 397-430, April.
When requesting a correction, please mention this item's handle: RePEc:usi:depfid:006. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Carlo Zappia)
If references are entirely missing, you can add them using this form.