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Why is wage inequality so high in the United States? Pitching cognitive skills against institutions (once again)

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  • Stijn Broecke
  • Glenda Quintini
  • Marieke Vandeweyer

Abstract

We revisit the relationship between cognitive skills and wage inequality using data from the Survey of Adult Skills (PIAAC). We argue that previous research suffered from a number of methodological shortcomings, and we offer a single and unified analytical framework for assessing the contribution of skills (including demand and supply conditions) and labour market institutions to wage inequality. Contrary to most previous research, we find that skills are at least as important as labour market institutions in explaining higher wage inequality in the United States.

Suggested Citation

  • Stijn Broecke & Glenda Quintini & Marieke Vandeweyer, 2015. "Why is wage inequality so high in the United States? Pitching cognitive skills against institutions (once again)," Working Papers of Department of Economics, Leuven 504893, KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven.
    • Handle: RePEc:ete:ceswps:504893
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    Cited by:

    1. Virginia Tsoukatou, 2020. "Examining the correlation of the level of wage inequality with labor market institutions," Papers 2001.06003, arXiv.org, revised Jan 2020.
    2. Stijn Broecke, 2016. "Do skills matter for wage inequality?," IZA World of Labor, Institute of Labor Economics (IZA), pages 232-232, February.

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