Occupational Autonomy and Wage Divergence: Evidence From European Survey Data

Abstract

Wages across occupations in Western Europe have diverged, resulting in increased wage inequality. However, existing theories such as routine-biased technological change (RBTC) or task offshoring fail to explain this trend. We propose a new explanation based on occupational autonomy. Autonomy measures workers' control and influence over their work process based on the tasks required in an occupation. Analysing individual-level data from the EU Survey of Income and Living Conditions, we reveal a rising autonomy wage premium, that is, higher wage growth for occupations with higher autonomy, which accurately predicts the observed occupational wage divergence. We also find that the autonomy premium increases more rapidly in countries and industries with greater employee monitoring and outsourcing, as well as in countries with declining minimum wages. These findings imply that low-autonomy occupations have been disadvantaged by recent socioeconomic trends that have altered power relations in the workplace. Notably, our analysis does not support previous explanations for occupational wage trends based on RBTC or task offshoring.