Essays on Wage Inequality: the Role of Composition, Immigration and the Cost-of-living

Cinzia Rienzo


Cinzia Rienzo (2011) Essays on Wage Inequality: the Role of Composition, Immigration and the Cost-of-living.

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This thesis focuses on the role of composition, immigration and the cost-of-living on wage inequality.

I begin by investigating to what extent changing characteristics of the labour force can help explain the fact that residual or within-group wage inequality –wage dispersion among workers with the same education and experience- is generally thought to account for most of the growth in wage inequality observed in several industrialised countries over the last thirty years. I compare the results for men and women in Italy, the UK, and the US from 1987 to 2003 or 2004. I find that even though residual does account for most of the wage variation in all countries, there is no common increasing trend in residual inequality. I also find that workforce composition does not always act to increase the residual wage inequality. In the second part of the thesis, I investigate the effects of immigration on residual wage inequality in the UK and the US between 1994 and 2008, by assessing whether and to what degree immigration contributed, along with technology, institutions and traditional explanations, to widening inequality. The analysis reveals that residual wage inequality is higher amongst immigrants than amongst natives. However, such differences do not contribute (much) to the increasing residual wage inequality observed in the two countries. The final section of this thesis questions how existing estimates of inequality change when differences in the cost-of-living and the differential concentrations of individuals with different levels of education across regions are taken into account. I focus on changes in the difference in the hourly wage for workers with a college degree and high school degree in the UK between 1997 and 2008. Results show that the national RPI underestimates the cost-of-living of workers living in the most expensive regions (London, South East) and overestimates the cost-of-living for “cheaper” regions (Northern Ireland, Scotland). When deflating hourly wages by the regional RPI, the average level of wages is lower, by 8% to 11% an hour for all workers in London and the South East, whilst it is higher, by around 2% to 9% in the remaining regions; similarly the level, but not changes, in wage inequality is lower when deflating by the real regional RPI.

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This is a Accepted version
This version's date is: 01/06/2011
This item is not peer reviewed

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Item TypeThesis (Doctoral)
TitleEssays on Wage Inequality: the Role of Composition, Immigration and the Cost-of-living
AuthorsRienzo, Cinzia

Deposited by () on 06-Jun-2011 in Royal Holloway Research Online.Last modified on 15-Feb-2017


(C) Cinzia Rienzo whose permission to mount this version for private research and study is acknowledged.