The Great Divergence(s)

2 PM, Seminar room, Department of Economics and Management

Speaker: Chiara Criscuolo, OECD

Abstract

This paper provides new evidence on the increasing dispersion in wages and productivity using novel micro-aggregated firm-level data from 16 countries. First, the paper documents an increase in wage and productivity dispersions in a large set of countries, for both manufacturing and nonfinancial market services. Second, it shows that these trends are driven by differences within rather than across sectors. Third, it suggests that wage divergence is linked to increasing differences between high and low productivity firms. Fourth, the increase in wage inequality is driven by a pull from the bottom (i.e. from the low-wage firms), while divergence at the top only occurs in the service
sector, and only after 2005. Fifth, it suggests that both globalisation and digitalisation imply higher wage divergence, but strengthen the link between productivity and wage dispersion. Finally, it offers preliminary analysis of the role of minimum wage, employment protection legislation, trade union density, and coordination in wage setting on wage dispersion and its link to productivity dispersion.

Keywords: Dispersion, Productivity, Sorting, Wages.
JEL codes: D2, J3

The paper is co-authored with Giuseppe Berlingieri (OECD) and Patrick Blanchenay (University of Toronto)