Bijdrage Wiemer Salverda en Daniele Checchi in nieuw Handbook of Income Distribution

In its series of Handbooks in Economics, Elsevier/North Holland just published Handbook of Income Distribution, Volume 2A/B. It is edited by Tony Atkinson and François Bourguignon, as a sequel to the first volume which was published in 2000.
Wiemer Salverda and Daniele Checchi of the University of Milan have contributed an extensive review of the literature on labour market institutions and wage dispersion, considering this also in the light of the household income distribution. They find two separate literatures, one on the distribution of individual wages and earnings and another on that of household incomes, which should be brought together. Combining these brings also ‘new institutions’ into play that affect household labour supply. Expanding female employment, dual-earnership and part-time employment strongly underline the relevance of connecting the two literatures.
They discuss the measurement of wage inequality, data sources, and stylized facts of wage dispersion for rich countries. The main focus of their contribution is an evaluation of the literature explaining the dispersion of wage rates and the role of institutions, which runs from the early 1980s to the recent literature on job polarization and tasks as well as on the minimum wage. Distinguishing between supply-and-demand approaches on the one hand and institutional ones on the other, they find the former challenged by the empirical measurement of technological change and a risk of ad hoc additions, without realizing their institutional preconditions. The institutional approach, on the other hand, faces an abundance of institutions without a clear conceptual delineation of institutions and their interactions. They add an empirical cross-country analysis of the correlation between institutional measures and wage inequality that incorporates unemployment and working hours dynamics and discusses the problems of matching individuals to their relevant institutional framework. Minimum wage legislation and active labour market policies come out as negatively correlated to earnings inequality in US and EU countries.

Their chapter is one out of 24 in the two voluminous, 2250-page, parts that make up the new Handbook and address many important issues – ranging from wealth inequality (Roine and Waldenström) or inheritance (Piketty and Zucman), via well-being (Fleurbaey et al.) and democracy and redistribution (Acemoglu et al.), to anti-poverty policy (Ravallion; Marx, Nolan and Olivera) to name but a few.

The Handbook:

Pre-final chapter version:

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