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

Author

Listed:
  • Carlos Vacas-Soriano

    (European Foundation for the Improvement of Living and Working Conditions – Eurofound)

  • Enrique Fernández-Macías

    (European Union Joint Research Centre - Seville)

  • Rafael Muñoz de Bustillo

    (University of Salamanca)

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.

Suggested Citation

  • Carlos Vacas-Soriano & Enrique Fernández-Macías & Rafael Muñoz de Bustillo, 2020. "Recent trends in wage inequality from an EU perspective: a tale of two convergences," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 47(3), pages 523-542, August.
    • Handle: RePEc:kap:empiri:v:47:y:2020:i:3:d:10.1007_s10663-019-09436-7
    DOI: 10.1007/s10663-019-09436-7
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    Cited by:

    1. Xiaoshan Chen & Spyridon Lazarakis & Petros Varthalitis, 2023. "Debt targets and fiscal consolidation in a two-country HANK model for the Euro Area," Working Papers 374162075, Lancaster University Management School, Economics Department.
    2. Xiaoshan Chen & Spyridon Lazarakis & Petros Varthalitis, 2023. "Debt targets and fiscal consolidation in a two country HANK model: the case of Euro Area," Working Papers 2023_02, Durham University Business School.

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    More about this item

    Keywords

    Wages; European Union; Inequality; Convergence;
    All these keywords.

    JEL classification:

    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General

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