Working Paper: CEPR ID: DP1679
Authors: Alan Barrett; Tim Callan; Brian Nolan
Abstract: The increased supply of skilled labour and institutional factors have been advanced in an effort to explain why some countries have experienced smaller increases in earnings dispersion and in returns to education relative to the United States. Ireland?s supply of skilled labour has increased sharply in recent years and it has had a highly centralized wage bargaining structure; hence, low growth in earnings dispersion would be expected. We compare the distribution of earnings in Ireland in 1987?94 and find a surprisingly large growth in earnings dispersion. In addition, using a decomposition technique we find that much of this is accounted for by increasing returns to education.
Keywords: earnings distribution; returns to education; Ireland
JEL Codes: J31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Educational attainment (I21) | Earnings dispersion (J31) |
| Returns to education (I26) | Earnings dispersion (J31) |
| Changes in age-education profile + Returns to education (I26) | Earnings dispersion (J31) |
| Increase in skilled labor supply + Centralized wage bargaining (J29) | Earnings inequality growth (D31) |
| Demand for skilled labor (J24) | Returns to education (I26) |