Endowments and rewards in the labour market: Their role in changing wage inequality in europe

Abstract

This paper proposes a comparative analysis on how the recent structural changes in the workforce composition affect wage inequality in a set of European countries. By performing RIF regression on the EU-SILC data, we assess how much of the overall Gini gap between 2005 and 2013 is due to employees’ characteristics rather than the capability of each country’s labour market to capitalise skills. The outright deterioration of all jobs, irrespective of skill levels required, and the lack of a well-defined structure of labour market may jeopardise wage distribution, and the wage structure plays a leading role in this process.