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Innovation and wage polarisation in Europe

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  • Elisabetta Croci Angelini
  • Francesco Farina
  • Mario Pianta

Abstract

In this article we improve on the literature dealing with the polarising effects of technological change on wages by proposing more rigorous definitions of wage dispersion within industries and of the different types and effects of innovation. We carry out an analysis across 10 manufacturing and service sectors in seven European countries (France, Italy, Germany, the Netherlands, Portugal, Spain and the UK), for two time periods. In addition to structural economic variables, we draw data from two waves of the Community Innovation Surveys (CIS 2, 1994-1996 and CIS3, 1998-2000) and from two waves of the European Community Household Panel (ECHP, 1994 and 2001) providing information on employment, wages, education and other individual's characteristics, that we grouped in three skill groups: managers and professionals, white-collar and blue-collar workers. We set up econometric models to study the impact that different technological strategies, labour market patterns, education and training have on the levels of wage polarisation within industries. Higher wage polarisation is found in industries with strong product innovation and high shares of workers with university education. Wage compression is associated to the diffusion of new process technologies and to high shares of workers with secondary education. Finally, a fast employment dynamics favours wage disparities.

Suggested Citation

  • Elisabetta Croci Angelini & Francesco Farina & Mario Pianta, 2009. "Innovation and wage polarisation in Europe," International Review of Applied Economics, Taylor & Francis Journals, vol. 23(3), pages 309-325.
    • Handle: RePEc:taf:irapec:v:23:y:2009:i:3:p:309-325
    DOI: 10.1080/02692170902811736
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    References listed on IDEAS

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    1. Giulia Faggio & Kjell G. Salvanes & John Van Reenen, 2010. "The evolution of inequality in productivity and wages: panel data evidence," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 19(6), pages 1919-1951, December.
    2. Kremer, M & Maskin, E, 1996. "Wage Inequality and Segregation by Skill," Working papers 96-23, Massachusetts Institute of Technology (MIT), Department of Economics.
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    1. Palacios González, Federico & García Fernández, Rosa Mª. & Llorca Rodríguez, Carmen M., 2014. "The Impact of the Crisis on the Polarization of Spanish Wages/El impacto de la crisis en la polarización de los salarios en España," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 32, pages 335-348, Enero.
    2. Maurizio Franzini & Mario Pianta, 2011. "Explaining inequality in today?s capitalism," Working Papers 1108, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2011.
    3. Mario Pianta, 2018. "Technology and Employment: Twelve Stylised Facts for the Digital Age," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 61(2), pages 189-225, June.
    4. Thanos Fragkandreas, 2022. "Three Decades of Research on Innovation and Inequality: Causal Scenarios, Explanatory Factors, and Suggestions," Working Papers 60, Birkbeck Centre for Innovation Management Research, revised Feb 2022.
    5. Huajie Jiang & Qiguo Gong, 2022. "Does Skill Polarization Affect Wage Polarization? U.S. Evidence 2009–2021," Sustainability, MDPI, vol. 14(21), pages 1-17, October.
    6. Mario Holzner, 2012. "The Determinants of Income Polarization on the Household and Country Level across the EU," wiiw Working Papers 93, The Vienna Institute for International Economic Studies, wiiw.
    7. Maurizio Franzini & Mario Pianta, 2015. "Four engines of inequality," LEM Papers Series 2015/20, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    8. Evan, Tomáš & Holý, Vladimír, 2021. "Economic conditions for innovation: Private vs. public sector," Socio-Economic Planning Sciences, Elsevier, vol. 76(C).
    9. Maurizio Franzini & Mario Pianta, 2015. "The making of inequality.Capital, labour and the distribution of income," Working Papers 1507, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2015.
    10. Tom'av{s} Evan & Vladim'ir Hol'y, 2020. "Economic Conditions for Innovation: Private vs. Public Sector," Papers 2004.07814, arXiv.org, revised Oct 2020.

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