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Firms' Wage Policies and the Rise in Labor Market Inequality: The Case of Portugal

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  • Ana Rute Cardoso

Abstract

Applying a multi-level wage regression model to a matched employer-employee data set for the years 1983 and 1992, the author investigates whether changes in company wage policies can account for the sharp rise in labor market inequality in Portugal. The results suggest that traditional wage progression mechanisms based on seniority lost influence between the two years, whereas general skills became more valued by employers. Changes in the returns to tenure at the micro level thus had an equalizing impact on the distribution, but sharply increased returns to education, as well as a rising wage disadvantage for women relative to men, increased overall inequality.

Suggested Citation

  • Ana Rute Cardoso, 1999. "Firms' Wage Policies and the Rise in Labor Market Inequality: The Case of Portugal," ILR Review, Cornell University, ILR School, vol. 53(1), pages 87-102, October.
    • Handle: RePEc:sae:ilrrev:v:53:y:1999:i:1:p:87-102
    DOI: 10.1177/001979399905300105
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    References listed on IDEAS

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    Cited by:

    1. Hipólito Simón, 2010. "International Differences in Wage Inequality: A New Glance with European Matched Employer–Employee Data," British Journal of Industrial Relations, London School of Economics, vol. 48(2), pages 310-346, June.
    2. Niklas Engbom & Christian Moser, 2022. "Earnings Inequality and the Minimum Wage: Evidence from Brazil," American Economic Review, American Economic Association, vol. 112(12), pages 3803-3847, December.
    3. Cardoso, Ana Rute, 2004. "Jobs for Young University Graduates: Is It Worth Having a Degree?," IZA Discussion Papers 1311, Institute of Labor Economics (IZA).
    4. David Card & Jörg Heining & Patrick Kline, 2013. "Workplace Heterogeneity and the Rise of West German Wage Inequality," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 128(3), pages 967-1015.
    5. David Card & Ana Rute Cardoso & Joerg Heining & Patrick Kline, 2018. "Firms and Labor Market Inequality: Evidence and Some Theory," Journal of Labor Economics, University of Chicago Press, vol. 36(S1), pages 13-70.
    6. Christina Håkanson & Erik Lindqvist & Jonas Vlachos, 2021. "Firms and Skills: The Evolution of Worker Sorting," Journal of Human Resources, University of Wisconsin Press, vol. 56(2), pages 512-538.
    7. Miguel Portela & Ana Rute Cardoso, 2005. "The provision of wage insurance by the firm: evidence from a longitudinal matched employer-employee dataset," NIPE Working Papers 17/2005, NIPE - Universidade do Minho.
    8. Jose Varejao & Anabela Carneiro, 2005. "Plant Turnover and the Evolution of Regional Inequalities," ERSA conference papers ersa05p709, European Regional Science Association.
    9. Facundo Alvaredo, 2008. "Top incomes and earnings in Portugal 1936-2004," PSE Working Papers halshs-00586795, HAL.
    10. Gustavo Britto, 2008. "Industrial productivity growth and localisation in Brazil: a firm level analysis," Anais do XXXVI Encontro Nacional de Economia [Proceedings of the 36th Brazilian Economics Meeting] 200807211548190, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    11. Paulo Guimarães & Pedro Portugal & Sónia Torres, 2010. "The Sources of Wage Variation: An Analysis Using Matched Employer-Employee Data," Working Papers w201025, Banco de Portugal, Economics and Research Department.
    12. Bryce Stephens, 2005. "Wage Dispersion, Compensation Policy and the Role of Firms," Longitudinal Employer-Household Dynamics Technical Papers 2005-04, Center for Economic Studies, U.S. Census Bureau.
    13. Gesine Stephan & Knut Gerlach, 2005. "Wage settlements and wage setting: results from a multi-level model," Applied Economics, Taylor & Francis Journals, vol. 37(20), pages 2297-2306.
    14. Cardoso, Ana, 2004. "Wage Mobility: Do Institutions Make a Difference? A Replication Study Comparing Portugal and the UK," CEPR Discussion Papers 4355, C.E.P.R. Discussion Papers.
    15. Stephan, Gesine & Gerlach, Knut, 2004. "Collective contracts, wages and wage dispersion in a multi-level model," IAB-Discussion Paper 200406, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].

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