Wage inequality determinants in European Union countries

Abstract

The explanation of the recent increase in intra-country wage inequality in favour of high-skilled labour has been dominated by two explanations: skill-biased technological change (SBTC) and international trade (IT) liberalization. Since few empirical studies have tried to assess both explanations across a comprehensive sample of countries, we analyse the impact of both and add some new variables within a unified framework and across 18 European Union countries. Results show that the SBTC, the immigration and education present an impact positive on wage inequality measured by the wage ratio of college to secondary graduates.