Winds of Change and Policies: The Inequality-Employment Trade-Off in the OECD

University of Salerno Dipartimento di Scienze Economiche e Statistiche Working Paper No. 3.198

74 Pages Posted: 21 Feb 2010 Last revised: 21 Jun 2012

See all articles by Giuseppe Mastromatteo

Giuseppe Mastromatteo

Catholic University of the Sacred Heart of Milan

Sergio Destefanis

University of Salerno

Date Written: March 3, 2008

Abstract

Using a data-set of OECD countries from 1980 to 2004, we assess the cross-country evidence on the trade-off between wage inequality and employment performance by relying on Data Envelopment Analysis, a nonparametric technique usually employed in the analysis of productive efficiency. DEA allows for the simultaneous determination of inequality and employment and treats the potential trade-off between inequality and employment in a very flexible way. We attribute the variations in the rates of unemployment and non-employment to two components: the changes due to a variation in wage inequality along the inequality-employment trade-off and the changes in efficiency which simultaneously affect inequality and employment). We find that changes in efficiency are a fairly important component of total changes.

Keywords: Labour-Market Performance, Wage Inequality, DEA

JEL Classification: E24, P17, P52, C14

Suggested Citation

Mastromatteo, Giuseppe and Destefanis, Sergio, Winds of Change and Policies: The Inequality-Employment Trade-Off in the OECD (March 3, 2008). University of Salerno Dipartimento di Scienze Economiche e Statistiche Working Paper No. 3.198, Available at SSRN: https://ssrn.com/abstract=1556433 or http://dx.doi.org/10.2139/ssrn.1556433

Giuseppe Mastromatteo

Catholic University of the Sacred Heart of Milan ( email )

Largo Gemelli, 1
Via Necchi 9
Milan, MI 20123
Italy

Sergio Destefanis (Contact Author)

University of Salerno ( email )

Via Giovanni Paolo II, 132
Fisciano, Salerno 84084
Italy

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