Intra-country wage inequality in the OECD countries

Abstract

Two reasons are mainly brought to explain the recent increase in intra-country wage inequality in favour of high-skilled labour: Skill-Biased Technological Change (SBTC) and International Trade Liberalisation (IT). Since few empirical studies have attempted to assess both interpretations across a comprehensive sample of countries, we have analysed the impact of both and added some new variables within a unified framework and across 30 OECD countries, between 2001 and 2015. Using panel data, results show that both explanations are crucial. However, considering all 30 OECD countries, the IT argument dominates. Further, we show that seven clusters must be considered in which at least one theory influence the wage gap.