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Diverging Developments in Wage Inequality

Which Institutions Matter?

Miami University

This article investigates how a particular wage-bargaining institution mitigates pressures from growing international competition and new production techniques and affects the degree of wage inequality growth. The extent to which industry-wide wage minima (wage scales) cover both higher and lower skilled workers affects developments in inequality. A series of cross-sectional time-series analyses are conducted using data from a recent unpublished data set from the Organisation for Economic Co-operation and Development (OECD), which covers 14 OECD countries from 1980 to 2002. The results strongly indicate that the presence of industry-wide wage scales is a key factor in the evolution of wage inequality across OECD countries.

Key Words: pay inequality • inequality • wage-bargaining institutions • OECD countries

This version was published on December 1, 2008

Comparative Political Studies, Vol. 41, No. 12, 1551-1582 (2008)
DOI: 10.1177/0010414007312837


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