Does Inequality in Skills Explain Inequality in Earnings Across Advanced Countries?

Dan Devroye and Richard Freeman

No 8140, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The distribution of earnings and the distribution of skills vary widely among advanced countries, with the major English-speaking countries, the US, UK, and Canada, having much greater inequality in both earnings and skills than continental European Union countries. This raises the possibility that cross-country differences in the distribution of skills determine cross-country differences in earnings inequality. Using the International Adult Literacy Survey, we find that skill inequality explains only about 7% of the cross-country difference in inequality. Most striking, the dispersion of earnings in the US is larger in narrowly defined skill groups than is the dispersion of earnings for European workers overall. The bulk of cross-country differences in earnings inequality occur within skill groups, not between them.

JEL-codes: J31 (search for similar items in EconPapers)
Date: 2001-02
New Economics Papers: this item is included in nep-lab
Note: LS
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Citations: View citations in EconPapers (76)

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Working Paper: Does Inequality in Skills Explain Inequality of Earnings Across Advanced Countries? (2002)
Working Paper: Does inequality in skills explain inequality of earnings across advanced countries? (2002)
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