Inter-Country Wage Differences in the European Union

Aurora Galego and João Pereira

CEFAGE-UE Working Papers from University of Evora, CEFAGE-UE (Portugal)

Abstract: In this paper we investigate the determinants of wage gaps between European countries using data from the EU-SILC data base. Unlike previous studies, we decompose these gaps across the wage distribution by employing a recent methodology proposed by Firpo et al (2009) and Fortin et al. (2011). This approach allows analysing the contribution of each covariate to the wage decomposition components (wage structure and wage composition). We conclude that both wage structure and wage composition effects contribute to explaining wage differentials, but that the wage structure effect is more important. This effect seems to be mainly explained by differences in unknown factors. The composition effect, in turn, is explained by differences in education, in the occupational structure, in the percentage of workers with supervisory responsibilities and to a lesser extent by differences in the industrial structure and in the workersÂ’ level of experience.

Keywords: Wage differences; Unconditional quantile regression; Wage decompositions. (search for similar items in EconPapers)
JEL-codes: C21 D31 J01 J31 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2015
New Economics Papers: this item is included in nep-eec
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:cfe:wpcefa:2015_15

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