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Supply and demand, allocation and wage inequality: an international comparison

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An allocation model of workers differentiated by their field of study is developed to test whether international differences in the wage structure can be explained by differences in labour demand and supply in each country. The model explicitly takes into account the effects of supply and demand shifts on the allocation structure to disentangle country specific differences in the recruitment for one occupation from real supply–demand effects. Empirical results based on data for nine countries show that cross-country differences in wage inequality explain at least two–third of the differences in labour demand and supply.

Document Type: Research Article


Affiliations: Research Centre for Education and the Labour Market (ROA), Maastricht University, Post bus 616, 6200 MD Maastricht, The Netherlands

Publication date: May 20, 2005

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