Sector Bias and Sector Dualism

Abstract

There are several explanations for the inequality upswing in the literature: rising globalization, the institutional re-structuring of the nation-states, as well as changes in the relation between the demand for and the supply of skills. Concerning demand changes, Kuznets and Lewis identified two inequality affecting mechanisms with regard to the agriculture-to-industry transition: sector bias — that is, inequality within sectors — and sector dualism — that is, inequality between sectors. In this article it is analyzed whether there are analogue effects on inequality from the sectoral change to the knowledge society. Following the strategy of a most-similar design and a variable oriented approach the hypotheses are tested cross-nationally and longitudinally in 19 OECD countries between 1970 and 1999. To verify sectoral effects, error component models are computed regressing the Gini-coefficient on a globalization measure, the union density, the educational attainment as well as the employment and income differential in the knowledge sector. The results show that some amount of the inequality upswing in the last few decades can be explained by the sectoral change to the knowledge society.