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Returns to Skills and the Distribution of Wages: Spain 1995–2010

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Listed:
  • Raquel Carrasco
  • Juan F. Jimeno
  • A. Carolina Ortega

Abstract

type="main" xml:id="obes12077-abs-0001"> In contrast to the pattern observed in other developed countries, the Spanish wage distribution compressed between 1995 and 2006 and became more disperse afterwards, so that in 2010 wage inequality was roughly similar to 1995. In this paper, we analyze the role of supply and demand factors when accounting for these facts. We start by decomposing observed wage changes into changes in the composition of the labour force and changes in the returns of workers' and jobs' characteristics. The results indicate that the compression of the wage distribution between 1995 and 2006 is largely explained by changes in returns, and particularly, by a decrease in the returns to education. We show that both the increase in the supply of high-skilled workers and the increasing weight of low-skilled occupations are related to the decreasing trend in the skill premium over this period. In contrast, the widening of the wage distribution after 2006 is largely explained by an increase in the relative demand for high-skilled workers generating an increase in the school premium.

Suggested Citation

  • Raquel Carrasco & Juan F. Jimeno & A. Carolina Ortega, 2015. "Returns to Skills and the Distribution of Wages: Spain 1995–2010," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 77(4), pages 542-565, August.
    • Handle: RePEc:bla:obuest:v:77:y:2015:i:4:p:542-565
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    File URL: http://hdl.handle.net/10.1111/obes.2015.77.issue-4
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    Cited by:

    1. Verdugo, Gregory & Allègre, Guillaume, 2020. "Labour force participation and job polarization: Evidence from Europe during the Great Recession," Labour Economics, Elsevier, vol. 66(C).
    2. Brindusa Anghel & Henrique Basso & Olympia Bover & José María Casado & Laura Hospido & Mario Izquierdo & Ivan A. Kataryniuk & Aitor Lacuesta & José Manuel Montero & Elena Vozmediano, 2018. "Income, consumption and wealth inequality in Spain," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 9(4), pages 351-387, November.
    3. repec:spo:wpmain:info:hdl:2441/4igrl22i129kl9t3bjsriribbs is not listed on IDEAS
    4. Santiago Pindado & Carlos Pindado & Javier Cubas, 2017. "Fréchet Distribution Applied to Salary Incomes in Spain from 1999 to 2014. An Engineering Approach to Changes in Salaries’ Distribution," Economies, MDPI, vol. 5(2), pages 1-19, May.
    5. Marta Escalonilla & Begoña Cueto & María José Pérez-Villadóniga, 2022. "Is the Millennial Generation Left Behind? Inter-Cohort Labour Income Inequality in a Context of Economic Shock," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 164(1), pages 285-321, November.
    6. repec:hal:spmain:info:hdl:2441/4igrl22i129kl9t3bjsriribbs is not listed on IDEAS

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