Ana Lucia Abeliansky, Inmaculada Martínez-Zarzoso, Klaus Prettner | Economic Modelling
Wage inequality continued to increase through the 1990s and 2000s in post-industrial economies. This article contributes to the debate on occupations and inequality by assessing the role of occupational segregation and occupational closure for understanding the increase in inequality. Using employee data for West Germany in 1992 and 2012 and based on decompositions of unconditional quantile regressions the article investigates the contribution of changes in both occupational characteristics to changes in the wage structure. Our findings suggest that both the employment increase in more closed occupations and increased rewards in these occupations have contributed to wage increases across the distribution, especially in the lower half of the wage distribution. Our results further suggest disproportional wage increases in female-dominated occupations at the bottom of the distribution and disproportional wage decreases in male-dominated occupations at the top. If these occupational characteristics had remained at 1992 levels, then 90/10 wage inequality would have been 25 per cent higher in 2012. Thus, changes in occupational characteristics have contributed to wage compression in the observation period.