Skills and Wage Inequality in Greece: Evidence From Matched Employer-Employee Data, 1995-2002

50 Pages Posted: 25 Mar 2011

Date Written: March 1, 2011

Abstract

This paper examines changes in the Greek wage distribution over 1995-2002 and the role of skills in these changes using a matched employer-employee data set. This data set enables us to account for firm heterogeneity and obtain a more refined picture of the impact of skills. The methodology adopted is the Machado-Mata decomposition technique, which separates the part of wage changes that is due to changes in the job/employer and employee characteristics from the part due to changes in the returns to these characteristics. Our results indicate that the role of skills has been decisive. The skill return effects in combination with the composition effects of tenure, which are arguably responsive to economic developments and market conditions, have had an important contribution to the changes in the Greek wage distribution. On the other hand, the impact of predetermined demographic changes, as those captured by the age and education composition effects, has been relatively milder.

Keywords: Returns to skill, Wage inequality, Quantile regression

JEL Classification: J31

Suggested Citation

Christopoulou, Rebekka and Kosma, Theodora, Skills and Wage Inequality in Greece: Evidence From Matched Employer-Employee Data, 1995-2002 (March 1, 2011). ECB Working Paper No. 1309, Available at SSRN: https://ssrn.com/abstract=1773210 or http://dx.doi.org/10.2139/ssrn.1773210

Rebekka Christopoulou (Contact Author)

Cornell University ( email )

Ithaca, NY 14853
United States

Theodora Kosma

Bank of Greece ( email )

21 E. Venizelos Avenue
GR 102 50 Athens
Greece

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