International Economics and Economic Policy

, Volume 5, Issue 4, pp 345–361 | Cite as

Wage dispersion in Germany and the US: is there compression from below?

Original Paper
First Online:

Abstract

Wage compression from below is a common diagnosis for Germany compared to the U.S. We develop alternative hypotheses in order to identify the so-called accordion effect, i.e. reduced inter-quantile distances below the median especially for low skilled and other ill-paid groups. Our results are partly at odds with wide-spread beliefs. Using large micro data sources we find evidence of an accordion effect at the low end of the distribution for the U.S. The results for Germany, however, are contrary to what one would have expected in case of marked wage compression from below. For low-skilled workers of both genders and for female workers in general we find higher inter-quantile distances below rather than above the median. By contrast, there is strong evidence for the accordion effect if skilled male workers are considered.

Keywords

Wage distribution Wage compression Accordion effect Micro data International comparisons Inter-quantile distances Wage flexibility 
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Notes

Acknowledgement

Financial support of the Deutsche Forschungsgemeinschaft (DFG) through the research project MO523/41 “Flexibilität der Lohnstruktur, Ungleichheit und Beschäftigung” within the “Schwerpunktprogramm 1169: Flexibilisierungspotenziale bei heterogenen Arbeitsmärkten” is gratefully acknowledged.

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Copyright information

© Springer-Verlag 2008

Authors and Affiliations

  1. 1.University of Regensburg and Institut für Arbeitsmarkt- und Berufsforschung der Bundesagentur für ArbeitNürnbergGermany

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