Wage Inequality and Wage Mobility in Europe

39 Pages Posted: 15 Jan 2013

See all articles by Ronald Bachmann

Ronald Bachmann

Rhine-Westphalia Institute for Economic Research (RWI-Essen)

Peggy Bechara

RWI Essen

Sandra Schaffner

RWI - Leibniz Institute for Economic Research

Multiple version iconThere are 2 versions of this paper

Date Written: December 1, 2012

Abstract

Using data from the European Union Statistics on Income and Living Conditions (EU-SILC), this paper investigates wage inequality and wage mobility in Europe. Decomposing inequality into within and between group inequality, we analyse to what extent wage inequality and mobility can be explained by observable characteristics. Furthermore, we investigate which individual and household characteristics determine transitions within the wage distribution. Finally, we examine the importance of institutions for wage inequality, wage mobility, and wage transitions. We find that overall, mobility reduces wage inequality. While a large part of wage inequality is due to unobservable characteristics, the equalizing effect of mobility mainly occurs within groups. Furthermore, both personal and household characteristics play an important role for wage transitions. Finally, our findings reveal large cross-country differences across Europe, which are partly linked to the institutional set-up of the national labour markets.

Keywords: Wage inequality, wage mobility, wage transitions, cross-country analysis

JEL Classification: J6, J31, P52

Suggested Citation

Bachmann, Ronald and Bechara, Peggy and Schaffner, Sandra, Wage Inequality and Wage Mobility in Europe (December 1, 2012). Ruhr Economic Paper No. 386, Available at SSRN: https://ssrn.com/abstract=2200444 or http://dx.doi.org/10.2139/ssrn.2200444

Ronald Bachmann (Contact Author)

Rhine-Westphalia Institute for Economic Research (RWI-Essen) ( email )

Hohenzollernstr. 1-3
Essen, 45128
Germany

Peggy Bechara

RWI Essen ( email )

Hohenzollernstr. 1-3
Essen, 45128
Germany

Sandra Schaffner

RWI - Leibniz Institute for Economic Research ( email )

Hohenzollernstr. 1-3
Essen, 45128
Germany

HOME PAGE: http://www.rwi-essen.de/schaffner

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