Work detail

What drives cross-country differences in average earnings: occupational structure or within-occupation wage levels?

Author: Bc. Marie Kubíková
Year: 2012 - summer
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Work type: Bachelors
Language: English
Pages: 64
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Abstract: This thesis analyses differences in average earnings across countries, and
examines whether they are due to different wages for comparable occupations or to
different occupational structure. To separate the effect of these two factors, I use a
thought experiment consisting of replacing a country´s structure or wages by those of
another country and observing the percentage change in the implied average earnings.
For the thought experiment, I use data on occupational structure and wages for 26
countries from the International Labour Organisation. The results suggest that most of
the difference in average earnings across countries is due to within-occupation
differences in wage levels and only a smaller part of them is due to different
occupational structure. The structure has a relatively higher impact in countries at low
levels of economic development.
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