Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/98984
Authors: 
Salverda, Wiemer
Checchi, Daniele
Year of Publication: 
2014
Series/Report no.: 
IZA Discussion Papers 8220
Abstract: 
Considering the contribution of the distribution of individual wages and earnings to that of household incomes we find two separate literatures that should be brought together, and bring 'new institutions' into play. Growing female employment, rising dual-earnership and part-time employment underline its relevance. We discuss the measurement of wage inequality, data sources, and stylized facts of wage dispersion for rich countries. The literature explaining the dispersion of wage rates and the role of institutions is evaluated, from the early 1980s to the recent literature on job polarization and tasks as well as on the minimum wage. Distinguishing between supply-and-demand approaches and institutional ones, we find the former challenged by the empirical measurement of technological change and a risk of ad hoc additions, without realizing their institutional preconditions. The institutional approach faces an abundance of institutions without a clear conceptual delineation of institutions and their interactions. Empirical cross-country analysis of the correlation between institutional measures and wage inequality incorporates unemployment and working hours dynamics, discussing the problems of matching individuals to their relevant institutional framework. Minimum wage legislation and active labour market policies come out negatively correlated to earnings inequality in US and EU countries.
Subjects: 
labour-market institutions
household labour supply
hourly wages
hours worked
annual earnings
dispersion
inequality measures
household incomes
minimum wage
unions
employment protection
JEL: 
D02
D13
D31
J22
J31
J51
J52
Document Type: 
Working Paper

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