Wage Dispersion and Employment for People With Low Skill : Sweden Compared to Six European Countries

This paper investigates in what way employment for low-skilled workers is connected to the wage dispersion in a country by comparing Sweden to six European countries. Previous research on this topic used cross-section analysis, but this essay takes another approach by comparing the changes in the wage dispersion and employment and by breaking down the change in the wage dispersion into parts and studying the change in the wage for different percentiles. The paper finds that wages in Sweden have not converged, which likely contributed to the increase in the employment gap between people with high and low skills. Two countries with different development were Germany and Norway. In line with recent research, in Germany, wage inequality increased and the employment gap between people with high and low skills decreased. In comparison, the case of Norway has not received much attention among researchers. Wages converged more in Norway than in Germany, yet employment increased more in Germany. The paper suggests a potential explanation: wages for the bottom percentiles of the earnings distribution fell in Germany, which it did not in Norway