Does Job Polarization Explain the Rise in Earnings Inequality? Evidence from Europe

54 Pages Posted: 27 Nov 2018 Last revised: 28 Nov 2018

See all articles by Maurizio Bussolo

Maurizio Bussolo

World Bank - Chief Economist Office for Europe and Central Asia

Ivan Torre

World Bank

Hernan Jorge Winkler

World Bank - International Finance Corporation (IFC)

Date Written: November 26, 2018

Abstract

Earnings inequality and job polarization have increased significantly in several countries since the early 1990s. Using data from European countries covering a 20-year period, this paper provides new evidence that the decline of middle-skilled occupations and the simultaneous increase of high- and low-skilled occupations are important factors accounting for the rise of inequality, especially at the bottom of the distribution. Job polarization accounts for a large share of the increasing inequality between the 10th and the 50th percentiles, but it explains little or none of the increasing inequality between the 50th and 90th percentiles. Other important developments during this period, such as changing wage returns, higher educational attainment, and increased female labor force participation, account for a small portion of the changes in inequality.

Keywords: Labor Markets, Educational Sciences, Gender and Development, Labor & Employment Law, Poverty Reduction Strategies

Suggested Citation

Bussolo, Maurizio and Torre, Ivan and Winkler, Hernan Jorge, Does Job Polarization Explain the Rise in Earnings Inequality? Evidence from Europe (November 26, 2018). World Bank Policy Research Working Paper No. 8652. Available at SSRN: https://ssrn.com/abstract=3290984

Maurizio Bussolo (Contact Author)

World Bank - Chief Economist Office for Europe and Central Asia ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

HOME PAGE: http://https://blogs.worldbank.org/team/maurizio-bussolo

Ivan Torre

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Hernan Jorge Winkler

World Bank - International Finance Corporation (IFC)

2121 Pennsylvania Avenue, NW
Washington, DC 20433
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
27
Abstract Views
49
PlumX Metrics