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Recent trends in wage inequality from an EU perspective: a tale of two convergences

Carlos Vacas-Soriano (), Enrique Fernandez-Macias and Rafael Muñoz de Bustillo
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Carlos Vacas-Soriano: European Foundation for the Improvement of Living and Working Conditions – Eurofound

Empirica, 2020, vol. 47, issue 3, No 4, 523-542

Abstract: Abstract This paper presents an analysis of two processes of convergence between European countries, in wage levels and wage distributions, and the extent to which they explain recent trends in wage inequality for the EU as a whole. The results show that wage convergence was the main driver behind wage inequality trends for the EU as a whole in the last decade, which was significantly reduced prior to the crisis as a result of wage catch-up growth mainly in Eastern Europe, a process which was interrupted during the crisis but reactivated again in the most recent period. On the other hand, the contribution of within-country wage developments to explain changes in wage inequality for the EU as whole over the last decade was much more limited, although it is interesting to note as well a process of convergence in wage distributions between European countries towards intermediate inequality levels. Policies directed at reducing wage disparities within countries offer the best prospect to tackle wage inequalities both at the national and EU-wide level, as illustrated by the introduction of the German statutory minimum wage in 2015.

Keywords: Wages; European Union; Inequality; Convergence (search for similar items in EconPapers)
JEL-codes: J30 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1007/s10663-019-09436-7

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