Taking the Sector Seriously: Data, Developments and Drivers of Intrasectoral Earnings Inequality

Social Indicators Research, DOI 10.1007/s11205-017-1677-2

26 Pages Posted: 16 Aug 2017

See all articles by Stefan Thewissen

Stefan Thewissen

Leiden University - Department of Economics, Students

Olaf van Vliet

Leiden University - Leiden Law School; Leiden University - Department of Economics

Chen Wang

Leiden University - Department of Economics; Leiden University

Date Written: June 2017

Abstract

The widespread increase in earnings inequality within postindustrial countries has received a lot of attention in both the public debate and the academic literature. Remarkably, the developments in earnings inequality have mainly been studied at the country level, whereas there is substantial variation across sectors within countries. This study explores the developments and the drivers of earnings inequality at the sectoral level. From an empirical perspective, this study aims to contribute to the inequality literature by analyzing measures of sectoral earnings inequality. The study relies on newly assembled data based on Luxembourg Income Study micro data for eleven sectors across eight countries over the past few decades. As a theoretical contribution, the study examines the three key explanations for increasing earnings inequality that have been debated and analysed by economists, sociologists and political scientists—namely, globalisation, technological change and waning labour union power—but this time with sectoral earnings inequality data. Interestingly, the results provide only limited support for the argument that international trade leads to higher levels of earnings inequality. When we focus the analysis on trade with less developed countries we find a positive association between trade and earnings inequality. With regard to technological change, our findings provide mixed evidence for the hypothesis that skill-biased technological change increases earnings inequality. Our results bring back the waning country-wide labour union power as an important driver of earnings inequality. This corresponds with the fact that our sectoral data reveal a more general trend towards rising inequality across sectors over time.

Keywords: Inequality; Wage bargaining; Globalisation; Technological change

JEL Classification: D31; F14; F15; F16; F60; F66; J31; J51; L60; L70; O33

Suggested Citation

Thewissen, Stefan and van Vliet, Olaf and Wang, Chen, Taking the Sector Seriously: Data, Developments and Drivers of Intrasectoral Earnings Inequality (June 2017). Social Indicators Research, DOI 10.1007/s11205-017-1677-2. Available at SSRN: https://ssrn.com/abstract=3018416

Stefan Thewissen

Leiden University - Department of Economics, Students ( email )

Netherlands

Olaf Van Vliet (Contact Author)

Leiden University - Leiden Law School ( email )

Steenschuur 25 PO Box 9520
Leiden, 2300 RA
Netherlands

HOME PAGE: http://www.law.leiden.edu/organisation/taxlawandeconomics/economics/staff/vliet.html

Leiden University - Department of Economics ( email )

P.O. Box 9520
2300 RA Leiden, NL-2300RA
Netherlands

HOME PAGE: http://www.law.leiden.edu/organisation/taxlawandeconomics/economics/staff/vliet.html

Chen Wang

Leiden University - Department of Economics ( email )

Steenschuur 25 PO Box 9520
Leiden, 2300 RA
Netherlands
++31715277819 (Phone)

HOME PAGE: http://law.leiden.edu/organisation/taxlawandeconomics/economics/staff/wang.html

Leiden University ( email )

Postbus 9500
Leiden, Zuid Holland 2300 RA
Netherlands

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