Worker Skills or Firm Wage-Setting Practices? Decomposing Wage Inequality Across 20 OECD Countries (im Erscheinen)

Abstract

"To what extent do differences in pay across firms contribute to overall wage inequality, and how does this vary across countries? We address this question by constructing a harmonised linked employer–employee dataset covering 20 OECD countries since the 2000s. On average across countries, differences in average wages between firms account for about half of overall wage inequality. Differences in firms’ pay premia account for about one third of the overall wage differences between firms. Over time, however, changes in these premia explain roughly two thirds of the increase in wage differences between firms. The remaining share reflects differences in workforce composition across firms, including the sorting of higher-skilled workers into higherpaying firms. Firm wage premia dispersion is systematically higher in countries with lower collective bargaining coverage and less binding minimum wages." (Author's abstract, IAB-Doku) ((en))

Cite article

Criscuolo, C., Hijzen, A., Schwellnus, C., Barth, E., Bertheau, A., Chen, W., Fabling, R., Fialho, P., Garita, J., Gorshkov, A., Grabska, K., Haramboure, A., Kambayashi, R., Koelle, M., Lankester, V., Leidecker, T., Muraközy, B., Nordström Skans, O., Nurmi, S., Peciar, V., Riom, C., Roth, D., Sandoval, C., Stadler, B., Upward, R. & Zwysen, W. (2026): Worker Skills or Firm Wage-Setting Practices? Decomposing Wage Inequality Across 20 OECD Countries (im Erscheinen). In: ILR review.