Worker skills or firm wage-setting practices? Decomposing wage inequality across 20 OECD countries

Research output: Chapter in Book/Report/Conference proceeding › Book chapter › Research

Standard

Worker skills or firm wage-setting practices? Decomposing wage inequality across 20 OECD countries. / Criscuolo, Chiara; Hijzen, Alexander ; Schwellnus, Cyrille ; Bertheau, Antoine.

The Role of Firms in Wage Inequality: Policy Lessons from a Large Scale Cross-Country Study. OECD Publishing, 2021.

Research output: Chapter in Book/Report/Conference proceeding › Book chapter › Research

Harvard

Criscuolo, C, Hijzen, A, Schwellnus, C & Bertheau, A 2021, Worker skills or firm wage-setting practices? Decomposing wage inequality across 20 OECD countries. in The Role of Firms in Wage Inequality: Policy Lessons from a Large Scale Cross-Country Study. OECD Publishing. https://doi.org/10.1787/7d9b2208-en

APA

Criscuolo, C., Hijzen, A., Schwellnus, C., & Bertheau, A. (2021). Worker skills or firm wage-setting practices? Decomposing wage inequality across 20 OECD countries. In The Role of Firms in Wage Inequality: Policy Lessons from a Large Scale Cross-Country Study OECD Publishing. https://doi.org/10.1787/7d9b2208-en

Vancouver

Criscuolo C, Hijzen A, Schwellnus C, Bertheau A. Worker skills or firm wage-setting practices? Decomposing wage inequality across 20 OECD countries. In The Role of Firms in Wage Inequality: Policy Lessons from a Large Scale Cross-Country Study. OECD Publishing. 2021 https://doi.org/10.1787/7d9b2208-en

Author

Criscuolo, Chiara ; Hijzen, Alexander ; Schwellnus, Cyrille ; Bertheau, Antoine. / Worker skills or firm wage-setting practices? Decomposing wage inequality across 20 OECD countries. The Role of Firms in Wage Inequality: Policy Lessons from a Large Scale Cross-Country Study. OECD Publishing, 2021.

Bibtex

@inbook{b1906079cb404591ad05d46f79be3941,
title = "Worker skills or firm wage-setting practices?: Decomposing wage inequality across 20 OECD countries",
abstract = "In many OECD countries, low productivity growth has coincided with rising wage inequality. Widening wage and productivity gaps between firms may have contributed to both developments. This chapter uses harmonised linked employer-employee data for 20 OECD countries to analyse the role of firms in wage inequality. The main finding is that, on average across countries, differences in average wages between firms explain about one-half of overall wage inequality. Two-thirds of between-firm wage inequality (i.e. about a third of overall wage inequality) reflect firms{\textquoteright} wage-setting practices or wage premia, i.e. the part of wages that is determined by the firm rather than the characteristics of its workers. The remaining third (i.e. a sixth of overall wage inequality) can be attributed to differences in workforce composition across firms. The contribution of differences in wage premia to wage inequality tends to be larger in countries with decentralised collective bargaining systems and lower levels of job mobility. Overall, these results suggest that firms play an important role in explaining wage inequality, as wages are to a notable extent determined by firm wage-setting practices rather than being exclusively by workers{\textquoteright} skills.",
author = "Chiara Criscuolo and Alexander Hijzen and Cyrille Schwellnus and Antoine Bertheau",
year = "2021",
doi = "10.1787/7d9b2208-en",
language = "English",
booktitle = "The Role of Firms in Wage Inequality",
publisher = "OECD Publishing",

}

RIS

TY - CHAP

T1 - Worker skills or firm wage-setting practices?

T2 - Decomposing wage inequality across 20 OECD countries

AU - Criscuolo, Chiara

AU - Hijzen, Alexander

AU - Schwellnus, Cyrille

AU - Bertheau, Antoine

PY - 2021

Y1 - 2021

N2 - In many OECD countries, low productivity growth has coincided with rising wage inequality. Widening wage and productivity gaps between firms may have contributed to both developments. This chapter uses harmonised linked employer-employee data for 20 OECD countries to analyse the role of firms in wage inequality. The main finding is that, on average across countries, differences in average wages between firms explain about one-half of overall wage inequality. Two-thirds of between-firm wage inequality (i.e. about a third of overall wage inequality) reflect firms’ wage-setting practices or wage premia, i.e. the part of wages that is determined by the firm rather than the characteristics of its workers. The remaining third (i.e. a sixth of overall wage inequality) can be attributed to differences in workforce composition across firms. The contribution of differences in wage premia to wage inequality tends to be larger in countries with decentralised collective bargaining systems and lower levels of job mobility. Overall, these results suggest that firms play an important role in explaining wage inequality, as wages are to a notable extent determined by firm wage-setting practices rather than being exclusively by workers’ skills.

AB - In many OECD countries, low productivity growth has coincided with rising wage inequality. Widening wage and productivity gaps between firms may have contributed to both developments. This chapter uses harmonised linked employer-employee data for 20 OECD countries to analyse the role of firms in wage inequality. The main finding is that, on average across countries, differences in average wages between firms explain about one-half of overall wage inequality. Two-thirds of between-firm wage inequality (i.e. about a third of overall wage inequality) reflect firms’ wage-setting practices or wage premia, i.e. the part of wages that is determined by the firm rather than the characteristics of its workers. The remaining third (i.e. a sixth of overall wage inequality) can be attributed to differences in workforce composition across firms. The contribution of differences in wage premia to wage inequality tends to be larger in countries with decentralised collective bargaining systems and lower levels of job mobility. Overall, these results suggest that firms play an important role in explaining wage inequality, as wages are to a notable extent determined by firm wage-setting practices rather than being exclusively by workers’ skills.

U2 - 10.1787/7d9b2208-en

DO - 10.1787/7d9b2208-en

M3 - Book chapter

BT - The Role of Firms in Wage Inequality

PB - OECD Publishing

ER -

ID: 336827500