Labor Market Institutions and Gender Differences in Wage Inequality.

In this paper, we present graphical and quantitative evidence on the important role played by changes in labor market institutions on the rise in wage inequality in the United States during the 1980s. We show that the decline in the real value of the minimium wage and in the rate of unionization explains over a third of the rise in inequality among men.

Coordination, inclusiveness and wage inequality between median and bottom income workers

What explains cross-national variation in wage inequality? Research in comparative political economy stresses the importance of the welfare state and wage coordination in reducing not only disposable income inequality but also gross earnings inequality. However, the cross-national variation in gross earnings inequality between median and low income workers is at odds with this conventional wisdom: the German coordinated market economy is now more unequal in this type of inequality than the UK, a liberal market economy. To solve this puzzle, I argue that non-inclusive coordination benefits median but not bottom income workers and is as a result associated with higher – rather than lower - wage inequality. I find support for this argument using a large N quantitative analysis of wage inequality in a panel of Western European countries. Results are robust to the inclusion of numerous controls, country fixed effects, and also hold with a sample of OECD countries. Taken together these findings force us to reconsider the relationship between coordination and wage inequality at the bottom of the income distribution.

Foreign aid, wage inequality and welfare for a small open economy with tourism

While the welfare effect of foreign aid has been extensively analyzed, the impact on the distribution of income has received less attention. At the same time, there has been recent work on tourism where it is complementary to aid in improving welfare.By combining these two strands, this paper concentrates on wage inequality in developing countries.We find that an increase in aid in the form of tied aid can lower the relative price of nontraded goods. The rent extracted from tourists declines, reducing welfare of domestic residents. In addition, the fall in the nontradable price can widen the wage inequality between skilled and unskilled workers.Thus, increased foreign aid may have detrimental effects on national welfare and the distribution of income. Rising wage inequality is confirmed by numerical simulations.

Wage inequality and welfare in developing countries: privatization and reforms in the short and long run

The impacts of privatization on wage inequality and welfare are considered for developing countries. In the short run, privatization can narrow wage inequality but reduce output of public firms. However, the favorable effect of privatization on lowering wage inequality vanishes in the long run due to the excessive entry of public firms. Thus, a policy recommendation for privatization would be: to avoid rising wage inequality, entry regulation of public firms should be imposed in the short run, and to mitigate the output contraction, complementary structural changes or policy reforms are needed in the transitional period of privatization.

Trade Liberalization and Regional Impacts on Residual Wage Inequality: Evidence from Brazil

O objetivo deste trabalho é entender mais sobre o papel da liberalização sobre a desigualdade salarial, mais precisamente, sobre a desigualdade residual dos salários. Usando a abertura comercial brasileira, a extensa redução tarifária que ocorreu entre 1987 e 1995, é investigado empiricamente se os diferentes níveis de exposição ao comércio entre os estados contribuíram para os diferentes movimentos da desigualdade. Os resultados indicam que estados mais expostos à liberalização comercial experimentaram um aumento relativo da desigualdade residual dos salários ou, de forma equivalente, uma menor redução. Estes resultados enriquecem a discussão dos efeitos da abertura comercial sobre a desigualdade.

Wage inequality and trade liberalization : evidence from Argentina

Wage inequality has increased substantially in Argentina during the nineties. At the same time during this decade Argentina has gone through a rapid and deep process of trade liberalization. In this paper we try to associate both phenomena. In particular, we attempt to answer the following question: Did trade liberalization play any role in shaping the argentine wage structure during the period studied? Specifically, we test whether those sectors where import penetration deepened are also the sectors where, ceteris paribus, a higher increase in wage inequality has taken place. We fmd evidence that supports this hypothesis.

Trade policy and wage inequality in Chile since the 1990s

Includes bibliography

Wage inequality in Latin America: a decade of changes

Includes bibliography

Wage inequality in Germany – What role does global trade play? Policy Brief #2015/03

Wage inequality in Germany has increased significantly since the mid-1990s. The intensification of international trade relations is a frequently cited cause for this issue. However, an empirical study revealed that global trade can only directly explain around 15 percent of the increase in wage inequality in Germany. Primarily, the growing heterogeneity among companies in Germany plays a greater role – especially within industries. The decline in collective bargaining is the primary company-specific driver of wage inequality. Nevertheless, protectionist measures would not be effective for achieving greater wage equality.

Wage inequality and the role of multinationals:evidence from UK panel data

Despite the increased attention on the impacts of globalisation, there has been little empirical investigation into the impact of multinational firms on the domestic labour market and in particular wage inequality, this is in spite of a rapid increase in foreign direct investment (FDI) at around the same time of rising inequality. Using UK panel data, this paper tests whether inward flows of FDI have contributed to increasing wage inequality. Even after controlling for the two most common explanations of wage inequality, technology and trade, we find that FDI has a significant effect upon wage inequality, with the overall impact of FDI explaining on average 11% of wage inequality. © 2003 Elsevier B.V. All rights reserved.

Wage inequality and productivity growth:motivating sticks and crippling carrots

Wage inequality is a particular focus of attention not only in public debates over the need for social regulation to support equity, but those over the implications of social regulation for productive performance. The present paper employs panel techniques to examine the comparative historical relationship between wage inequality and hourly labour productivity growth in the manufacturing sectors of nine advanced industrialised nations over the period 1970-1995. The results show that whilst greater inequality in the top half of the wage distribution is associated with greater productivity growth, greater inequality in the bottom half is associated with lower productivity growth. It appears that whilst wage inequality in the top half of the distribution productively motivates higher earners, wage inequality in the bottom half of the distribution is detrimental for productivity performance. The latter result is most likely attributable to the weak incentives to reorganise production where extremely low pay is feasible.