Wage Distributions by Bargaining Regime: Linked Employer-Employee Data Evidence from Germany

Using linked employer-employee data from the German Structure of Earnings Survey 2001, this paper provides a comprehensive picture of the wage structure in three wage-setting regimes prevalent in the German system of industrial relations. We analyze wage distributions for various labor market subgroups by means of kernel density estimation, variance decompositions, and individual and firm-level wage regressions. Unions' impact through collective and firm-level bargaining mainly works towards a higher wage level and reduced overall and residual wage dispersion. Yet observed effects are considerably heterogeneous across different labor market groups. There is no clear evidence for wage floors formed by collectively bargained low wage brackets which would operate as minimum wages for different groups of workers.Collective wage bargaining, wage structure, kernel density estimation, variance decomposition, wage equations, German Structure of Earnings Survey

Wage diversity in the euro area - an overview of labour cost differentials across industries

This Paper provides an overview of the magnitude of sectoral wage differentials in the euro area as a whole. Even when adjusting for structural sectoral features such as the skill structure or the proportion of part-timers, average wage levels in services are substantially lower than in manufacturing. The paper also studies how the euro area wage structure compares with that of the United States and the United Kingdom. It discusses some possible determinants of intersectoral wage differentials in the euro area and their likely implications from a policy perspective. A number of worker characteristics (e.g. age, skills, the proportion of temporary or self-employed) are highly correlated with the structure of wage differentials. At the same time, wage differentials are also highly correlated with sector-specific features such as average firm size or capital intensity. Finally, the paper presents some stylised facts on how the euro area wage structure has evolved since the early 1980s.Intersectoral wage differential; wage determination; euro area.

The Impact of Gender Segregation on Male-Female Wage Differentials

This paper presents new evidence on the role of gender segregation and pay structure in explaining gender wage differentials of full-time salaried workers in Spain. Data from the 1995 and 2002 Wage Structure Surveys reveal that raw gender wage gaps decreased from 0.24 to 0.14 over the seven-year period. Average differences in the base wage and wage complements decreased from 0.09 to 0.05 and from 0.59 to 0.40, respectively. However, the gender wage gap is still large after accounting for workers’ human capital, job and pay structure characteristics, and female segregation into low-paying industries, occupations, establishments, and occupations within establishments.gender wage differentials, segregation, matched employer employee data

Swimming with the tide: solidarity wage policy and the gender earnings gap

The purpose of this paper is to examine the role of wage compression for the gender wage gap in Sweden during the period 1968-1991. We find that the effects of changes in the wage structure on women's wages have varied over time and have had partly counteracting effects. Changes in industry wage differentials have systematically worked against women, while the changes in the returns to human capital and unobserved characteristics have contributed to reductions in the gender wage gap. Changes in the wage structure were particularly important between 1968 and 1974, when the reduction of overall wage inequality was dramatic. In 1981, however, the wage compression effect accounted only for a minor proportion of women's relative wage gains, as compared to 1974. At this time, women gained in relative wages mainly because discrimination was mitigated and/or the gender gap in unobserved skills was reduced. Between 1981 and 1991 there is a small increase in the gender wage gap. This small increase seems to have been driven by changed inter-industry wage differentialsGender wage gap; Wage structure

Swimming With the Tide: Solidarity Wage Policy and the Gender Earnings Gap

The purpose of this paper is to examine the role of wage compression for the gender wage gap in Sweden during the period 1968-1991. We find that the effects of changes in the wage structure on women’s wages have varied over time and have had partly counteracting effects. Changes in industry wage differentials have systematically worked against women, while the changes in the returns to human capital and unobserved characteristics have contributed to reductions in the gender wage gap. Changes in the wage structure were particularly important between 1968 and 1974 when the reduction of overall wage inequality was dramatic. In 1981, however, the wage compression effect accounted only for a minor proportion of women's relative wage gains, as compared to 1974. At this time, women gained in relative wages mainly because discrimination was mitigated and/or the gender gap in unobserved skills was reduced. Between 1981 and 1991 there is a small increase in the gender wage gap. This small increase seems to have been driven by changed inter-industry wage differentials.Gender wage differentials; trade union; wage structure

A comparative analysis of East and West German labor markets before and after unification

This paper uses micro data to analyze the wage structures in East Germany and West Germany before and after unification. In 1988, the wage distribution in East Germany was much more compressed than in West Germany or in the U.S. Since the collapse of Communism and unification with West Germany, however, the wage structure in eastern Germany has changed considerably. In particular, wage variation has increased, the payoff to education has decreased slightly, industry differentials have expanded, and the white collar premium has increased. Although average wage growth has been remarkably high in eastern Germany, individual variation in wage growth is similar to typical western levels. The wage structure of east Germans who work in west Germany resembles the wage structure of native west Germans in some respects, but the experience-earnings profile is flat. --

Riding the Transition Roller-Coaster: Flexibility and the Inter-Industry Wage Structure in Russia

This paper examines the changes in the inter-industry wage structure experienced by Russia since 1993, as part of its transition from a plan-based economy to a more \market oriented" structure. Using two Russian household panel data sets, the RLMS and the RUSSET, we _nd that since the transformation process began, the dispersion of inter-industry wage structure has increased. Moreover, Russia exhibits large movements in wage premia, as industries respond to massively changing demand conditions. The issue of wage arrears (unpaid wages or outstanding pay), which a_ects half of all employees, plays an important role in the determination of wages. Studies, which do not account for wage arrears, overestimate the overall inter-industry wage dispersion. Despite movements towards a privatized market economy, we still _nd government ownership and Soviet network e_ects play an important role in determining the wage structure.Inter-Industry Wage Differentials, Transition Economies, Wage Arrears, Networking

The Quality Distribution of Jobs and the Structure of Wages in Search Equilibrium

When match formation is costly and wage determination is decentralized, privately optimal investments in job and worker quality diverge from socially efficient outcomes. To explore this issue, I consider search equilibrium environments with endogenous quality distributions for jobs and workers. I show that a search equilibrium with decentralized wage setting exhibits excessive relative supplies of inferior jobs and inferior workers. Moreover, there are fundamental tensions between the standard wage-setting condition for an efficient total supply of jobs (and workers) in two-sided search models and the conditions required for efficient mixes of jobs and workers. I also derive the efficient wage structure, contrast its properties to the decentralized wage structure and evaluate the welfare and productivity gains of moving to an efficient wage structure. Numerical exercises show that centralized bargaining between a labor union and an employer confederation over the structure of wages can improve productivity and welfare by compressing job-related wage differentials.

Revisiting the German wage structure

This paper shows that wage inequality in West Germany has increased over the past three decades, contrary to common perceptions. During the 1980s, the increase was concentrated at the top of the distribution; in the 1990s, it occurred at the bottom end as well. Our findings are consistent with the view that both in Germany and in the United States, technological change is responsible for the widening of the wage distribution at the top. At the bottom of the wage distribution, the increase in inequality is better explained by episodic events, such as supply shocks and changes in labor market institutions. These events happened a decade later in Germany than in the United States

WAGE STRUCTURE, INEQUALITY AND SKILL-BIASED CHANGE: IS ITALY AN OUTLIER?

This paper investigates the relation between wage structure, inequality and skill-biased change in Italy between 1993 and 2004. Using a quantile decomposition analysis, we point out that changes in wage structure are mainly driven by the negative coefficients component, which represents also one of driving force of the trends of wage inequality. This evidence suggests that the changes in wage structure in Italy can hardly be explained referring to a skill-biased change explanation. Evidence that is further reinforced by a set of descriptive statistics showing that the increasing educational attainments of the workforce might have been crowded out by a stable trend in the demand for skills.Educational wage premia, Human Capital, Skill Biased Change, Quantile regression, Wage Decomposition, Italy