Working Paper: CEPR ID: DP2321
Authors: Dennis J. Snower
Abstract: This paper surveys major empirical regularities concerning changes in earnings inequality in Europe and the US over the past 25 years. Next, it indicates which of these regularities can be explained within the competitive demand-supply framework of analysis and what is left unexplained. Finally, it considers the implications of organizational change as a possible rationale for recent inequality developments.
Keywords: inequality; income distribution; earnings; wage rigidities; skilled and unskilled workers; education; globalization; technological change; organizational change; labour supply; minimum wage; unionization
JEL Codes: D23; D24; D31; D33; D63
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| increased demand for skilled labor (J24) | rising earnings for skilled workers (J31) |
| increased demand for skilled labor (J24) | declining earnings for unskilled workers (F66) |
| globalization and technological change (O33) | increased demand for skilled labor (J24) |
| decline in unionization (J50) | wage dispersion (J31) |
| demand shift for skilled labor must have outpaced supply shift (J69) | widening wage gap (J31) |