Transatlantic differences in labour markets

Changes in wage and non-employment structures in the 1980s and the 1990s

authored by

Patrick A. Puhani

Abstract

Rising wage inequality in the United States and Britain and rising continental European unemployment have led to a popular view in the economics profession that these two phenomena are related to negative relative demand shocks against the unskilled, combined with flexible wages in the Anglo-Saxon countries, but wage rigidities in continental Europe ('Krugman hypothesis'). This paper tests this hypothesis based on seven large person-level data sets for the 1980s and the 1990s. I use a more sophisticated categorization of low-skilled workers than previous studies, which exhibits differences between German workers with and without apprenticeship training, particularly in the 1980s. I find evidence for the Krugman hypothesis when Germany is compared with the United States. However, supply changes differ considerably between countries, with Britain experiencing enormous increases in skill supply explaining the relatively constant British skill premium in the 1990s.

Organisation(s)

Institute of Labour Economics

External Organisation(s)

University of St. Gallen (HSG)
Université Panthéon-Assas
Institute of Labor Economics (IZA)

Type

Article

Journal

German economic review

Volume

9

Pages

312-338

No. of pages

27

ISSN

1465-6485

Publication date

08.2008

Publication status

Published

Peer reviewed

Yes

ASJC Scopus subject areas

Economics and Econometrics

Sustainable Development Goals

SDG 8 - Decent Work and Economic Growth

Electronic version(s)

https://doi.org/10.1111/j.1468-0475.2008.00435.x (Access: Closed)
http://tuprints.ulb.tu-darmstadt.de/4773 (Access: Open)