Wage dynamics in light of the structural changes in the labour market across four more economically developed countries of Europe

Rosalia Castellano, Gaetano Musella and Gennaro Punzo

Review of Social Economy, 2021, vol. 79, issue 2, 222-260

Abstract: This paper investigates the evolution of wages and wage inequality in four European countries during the economic crisis in light of important shifts in the occupational structure. Through recentered influence function regression for quantiles of European Union Survey on Income and Living Conditions data, this analysis links research on the primary forces of both wage and wage inequality to the decomposition of their changes between 2005 and 2013 into the composition effect and the wage structure. France and Germany show decreasing wage inequality despite having opposite changes in wages, whereas the United Kingdom and Italy show increasing wage inequality while maintaining opposite changes in wages. The wage structure has a greater influence on generating variation in the real salary, and the composition effect mostly explains the change in wage inequality with varying intensity throughout the distribution. Italy is the only country whose wage structure significantly contributes to wage inequality.

Date: 2021
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DOI: 10.1080/00346764.2019.1655163

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