Explaining Cross-National Variation in Wage Inequality

Abstract

Purpose – The aim of this chapter is to measure the wage premium associated with various levels of educational attainment using micro-data from the Luxembourg Income Study. The study focuses on working-aged adults in eight developed countries for various years between 1984 and 2005.

Methodology – The chapter computes wage ratios reflecting the premium associated with low, medium, and high levels of educational attainment, which correspond to completion of less than secondary education, secondary education, and tertiary education, or an equivalent level of vocational training. These ratios, along with several other variables, are then related to the 90/10, 75/25, 90/50, and 50/10 wage ratios in a country-level unbalanced pooled cross-sectional time series analysis.

Findings – Returns to education account for an important share of cross-country variation in various modes of wage inequality, although other variables matter as well.

Research limitations – The data needed to compute returns to education data are unavailable for a number of countries and years.

Originality – The chapter offers a more precise measure of the returns to education than earlier cross-national work, which has typically focused on average levels of education and other aggregate measures.

Citation

Mahler, V.A. (2011), "Explaining Cross-National Variation in Wage Inequality", Brady, D. (Ed.) Comparing European Workers Part A (Research in the Sociology of Work, Vol. 22 Part 1), Emerald Group Publishing Limited, Leeds, pp. 115-139. https://doi.org/10.1108/S0277-2833(2011)0000022007