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Cross-National Differences In The Rise In Earnings Inequality: Market And Institutional Factors

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Peter Gottschalk
Mary Joyce

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Abstract

This paper uses data from the Luxembourg Income Study to explore the role of differences in supply shifts in explaining cross-national differences in the rise in earnings inequality. Changes in returns to age and education are estimated for eight countries using a common specification of earnings functions across years and countries. We find that the small overall increase in earnings inequality in many countries reflects large but offsetting changes in returns to skill and changes in inequality within age education cells. Furthermore, these differences in returns to skill can largely be explained by differences in supply shifts. © 2000 by the President and Fellows of Harvard College and the Massachusetts Institute of Technolog

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Publisher Info
Article provided by MIT Press in its journal The Review of Economics and Statistics.

Volume (Year): 80 (1998)
Issue (Month): 4 (November)
Pages: 489-502
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Handle: RePEc:tpr:restat:v:80:y:1998:i:4:p:489-502

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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.:
  1. Lawrence F. Katz & Ana L. Revenga, 1990. "Changes in the Structure of Wages: The U.S. versus Japan," NBER Working Papers 3021, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. R. E. Baldwin & G. G. Cain, . "Shifts in U.S. Relative Wages: The Role of Trade, Technology, and Factor Endowments," Institute for Research on Poverty Discussion Papers 1132-97, University of Wisconsin Institute for Research on Poverty. [Downloadable!]
  3. Robert E. Baldwin & Glen G. Cain, 1997. "Shifts in U.S. Relative Wages: The Role of Trade, Technology and Factor Endowments," NBER Working Papers 5934, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  4. Fortin, Nicole M & Lemieux, Thomas, 1997. "Institutional Changes and Rising Wage Inequality: Is There a Linkage?," Journal of Economic Perspectives, American Economic Association, vol. 11(2), pages 75-96, Spring. [Downloadable!] (restricted)
  5. Per-Anders Edin & Bertl Holmlund, 1993. "The Swedish Wage Stucture: The Rise and Fall of Solidarity Wage Policy?," NBER Working Papers 4257, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  6. Bean, Charles R, 1994. "European Unemployment: A Survey," Journal of Economic Literature, American Economic Association, vol. 32(2), pages 573-619, June. [Downloadable!] (restricted)
  7. Richard B. Freeman & Karen Needels, 1993. "Skill Differentials in Canada in an Era of Rising Labor Market Inequality," NBER Chapters, in: Small Differences That Matter: Labor Markets and Income Maintenance in Canada and the United States, pages 45-68 National Bureau of Economic Research, Inc. [Downloadable!]
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  8. Borland, Jeff & Wilkins, Roger, 1996. "Earnings Inequality in Australia," The Economic Record, The Economic Society of Australia, vol. 72(216), pages 7-23, March.
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  9. Layard, R. & Nickell, S., . "Layard-Nickell," Instructional Stata datasets for econometrics layardnickell, Boston College Department of Economics. [Downloadable!]
  10. Baldwin, Robert E & Cain, Glen C, 1997. "Shifts in US Relative Wages: The Role of Trade, Technology and Factor Endowments," CEPR Discussion Papers 1596, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  11. Gottschalk, Peter, 1997. "Inequality, Income Growth, and Mobility: The Basic Facts," Journal of Economic Perspectives, American Economic Association, vol. 11(2), pages 21-40, Spring. [Downloadable!] (restricted)
  12. David Card & Francis Kramarz & Thomas Lemieux, 1995. "Changes in the Relative Structure of Wages and Employment: A Comparison of the United States, Canada, and France," Working Papers 734, Princeton University, Department of Economics, Industrial Relations Section.. [Downloadable!]
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  13. Levy, Frank & Murnane, Richard J, 1992. "U.S. Earnings Levels and Earnings Inequality: A Review of Recent Trends and Proposed Explanations," Journal of Economic Literature, American Economic Association, vol. 30(3), pages 1333-81, September. [Downloadable!] (restricted)
  14. repec:fth:prinin:355 is not listed on IDEAS
  15. Chinhui Juhn, 1994. "Wage Inequality and Industrial Change: Evidence from Five Decades," NBER Working Papers 4684, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  16. Lawrence F. Katz & Gary W. Loveman & David G. Blanchflower, 1993. "A Comparison of Changes in the Structure of Wages," NBER Working Papers 4297, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  17. Nickell, Stephen & Bell, Brian, 1996. "Changes in the Distribution of Wages and Unemployment in OECD Countries," American Economic Review, American Economic Association, vol. 86(2), pages 302-08, May. [Downloadable!] (restricted)
  18. Katharine G. Abraham & Susan N. Houseman, 1993. "Earnings Inequality in Germany," NBER Working Papers 4541, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  19. Richard B. Freeman & Lawrence F. Katz, 1995. "Differences and Changes in Wage Structures," NBER Books, National Bureau of Economic Research, Inc, number free95-1.
  20. Blank, Rebecca M, 1995. "Changes in Inequality and Unemployment over the 1980s: Comparative Cross-National Responses," Journal of Population Economics, Springer, vol. 8(1), pages 1-21, February.
  21. Juhn, Chinhui & Murphy, Kevin M & Pierce, Brooks, 1993. "Wage Inequality and the Rise in Returns to Skill," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 410-42, June. [Downloadable!] (restricted)
  22. Francine D. Blau & Lawrence M. Kahn, 1996. "International Differences in Male Wage Inequality: Institutions versus Market Forces," NBER Working Papers 4678, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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