BY: RICHARD B. FREEMAN
National Bureau of Economic Research (NBER)
London School of Economics & Political Science
Centre for Economic Performance
Harvard University
RONALD SCHETTKAT
Utrecht University
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=228094
Paper ID: NBER Working Paper No. W7611
Date: March 2000
Contact: RICHARD B. FREEMAN
Email: Mailto:freeman at nber.org
Postal: National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138 USA
Phone: (617)868-3900
Fax: (617)868-2742
Co-Auth: RONALD SCHETTKAT
Email: Mailto:R.Schettkat at fss.uu.nl
Postal: Utrecht University
PO Box 80.140
NL-3508 TC Utrecht, THE NETHERLANDS
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ABSTRACT:
Is the expansion of jobs in low-wage services in Europe
restricted by high wages? With services now the main sector
source of employment growth this question becomes crucial, and
we examine it through a detailed comparison of the role of
low-wage services in the US and Germany. We find a clear
low-wage service jobs deficit in Germany, but this is not due to
excessively high German wages. Relative wages in low-wage
sectors are extremely similar in the two countries. This is a
striking finding given the much wider wage distribution in the
US. The explanation for this phenomenon is the much greater
intra-industry wage dispersion in the US producing similar
industry mean wages as the much narrower German distribution.
JEL Classification: J31