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Abstract
This dissertation investigates how specific institutional characteristics shape the development of pay inequality in the context of shifts in demand favoring higher-skilled workers. Specifically, the dissertation examines the following question: Why has wage inequality grown in many advanced industrial countries over the past 25 years but not in others? My research finds that shifts in demand are more likely to be translated into an increase in pay differences between skill-levels in the context of repeated and intense conflicts over wage differences. Based on in-depth case studies of Italy and Sweden and a set of statistical analyses using data from 15 OECD countries, I find that two specific bargaining institutions critically impact the nature and the likelihood of distributional conflicts over wage differentials. First, the lines along which union confederations are drawn (whether by occupational-type or according to ideological or religious affiliation) substantially impacts the likelihood that actively egalitarian institutions will be dismantled with the deliberate goal of increasing wage differentials. Second, the degree to which industry-wide wage minima (wage scales) cover both high- and lower-skilled workers, can impact negotiations by providing a neutral reference point for skill-based wage differentials. When such a reference point exists, it is more likely that skill-based wage differentials remain relatively stable over time. Operating independently and interactively, these factors shape developments in pay inequality by shaping the nature of distributional debates and the sustainability of egalitarian wage provisions.
