Drivers behind wage gaps in Europe


Wage differences across Europe are investigated in new working paper from the European Trade Union Institute (ETUI).


What drives wages gaps in Europe examines to what extent wage gaps in average wages observed between countries are related to differences in workforce composition, in workplaces, as well as the types of jobs conducted in different countries. The report also assesses the observed differences by identifying which sectors and occupational groups contribute most to the wage gaps observed at the country level.


The key findings of the paper include: 


• in high-wage countries, the positive wage premium can be attributed to the structural differences between economies; wage premiums diminish once productivity-related characteristics are taken into consideration and controlled for;


• in most European low-wage countries, controlling for worker and workplace characteristics in fact increases the wage gap;


• once productivity-related characteristics are controlled for, wage gaps between East and West are in fact wider than they appear when simply comparing average wage levels across countries; and


• negative wage premiums can be related to productivity-determining factors that are unrelated to observed worker and workplace characteristics, but the analysis suggests there is scope for wage increases, particularly in Central and Eastern European countries.


https://www.etui.org/Publications2/Working-Papers/What-drives-wage-gaps-in-Europe