WHAT DRIVES WAGE INEQUALITY: EVIDENCE FROM SOUTHERN EUROPE

Abstract

In this article we study the impact of microeconomic characteristics on wage inequality in Southern European countries. We estimate regression models for four inequality measures using the recentered influence function regression method proposed by Firpo et al. (2009). We conclude that there is heterogeneity in the effects of covariates on inequality across countries and throughout wage distribution, particularly in the case of education, experience and the public sector. On the contrary, the occupation structure reveals similar effects for all countries, as higher positions on the occupational structure are associated with increased inequality. Inter-industry wage differentials within each country also contribute to increased wage inequality.